Celebrate #WageWeek, support raising the minimum wage

By Allan Freyer - NC Justice Center

Nine years ago Tuesday, the United States increased the minimum wage to $7.25 an hour. Yet in the decade since, workers have lived through the worst recession since the 1930’s and an economic recovery that saw their wages fail to keep pace with rising costs of living. More than half of the jobs created since the end of the recession don’t pay workers the $33,700 it takes for a family of one adult and one child to make ends meet in North Carolina. Fortunately, state and federal policymakers have the opportunity to help more workers afford the basics—and put food on the table, gas in the car, and a roof over their heads—by raising the minimum wage.

Raising the legal wage floor will help workers and boost the economy. Over the past thirty years, business productivity—the value of goods and services produced by each worker—has almost doubled in North Carolina and across the country. Yet these historic productivity gains have gone to increase corporate bottom lines rather than workers’ wages; corporate employers have spent these gains on executive compensation, expensive stock buy-backs, dividends, and income distributions to shareholders, benefiting wealthy investors at the expense of workers and their wages.

So while these productivity gains have generated a three-decades-long “Golden Age of Corporate Profits,” very few of the fruits of this Golden Age have made its way into workers’ paychecks. In fact, the share of North Carolina’s GDP (the value of all the goods and services in our state’s economy) going to workers’ wages and benefits has declined over the past decade at the same time that the economy itself experienced growth—the textbook definition of an economy that’s leaving its workers behind. As a result, workers are earning $11 billion less today as a share of our economy than they did in 2007. Given these trends, it’s no surprise that North Carolina has experienced significant long-term wage stagnation and rising income inequality.

And while workers can feel justifiably angry at losing out on the benefits of their labor, wage stagnation also has a deeper impact on the ability of the economy to continue growing and creating jobs. That’s because the combination of stagnating wages and rising prices hollows out families’ ability to buy the goods and services they need—from groceries and cars to cell phones and childcare. As a result, families buy less from local businesses, in turn lowering business sales and profit margins. This holds down business expansion, reduces hiring, and ultimately drags down economic growth in a damaging cycle of scarcity.

In contrast, raising wages creates a virtuous cycle that promotes economically vibrant communities. When workers earn enough to afford the basics, their paychecks get spent at local businesses, which in turn see higher sales, bigger profits, and the financial resources to create more jobs.

As a result, it’s clear that raising the minimum wage can play an important role in reversing wage stagnation and promoting a vibrant economy. The federally mandated wage floor currently provides workers with a paltry annual income of just $15,080—clearly nowhere close to the wages families need to afford the basics and stay out of poverty. Raising the wage to just $10 an hour would boost the earnings of more than one-million workers in North Carolina, the overwhelming majority of whom (85%) are older than 20 and work full-time.

That’s why we should all celebrate and lift up #WageWeek over the next five days. Simply put, raising the minimum wage is a critical step in creating jobs that boost the economy and helping reverse decades of stagnating wages. Let’s get to work.

Allan Freyer is the Director of Workers’ Rights at the North Carolina Justice Center.


By Allan Freyer

NC Justice Center

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