Middle-Class Meltdown and the Minimum Wage

Friday, 14 Dec 2012 10:06 AM

By John Morgan

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Many American who lost middle-class jobs during the recession have been forced into low-paying positions, leading to a clamor for hikes in the minimum wage and more worker activism, according to the Los Angeles Times.

The National Employment Project calculated that of the 1.9 million jobs created during the recovery, 43 percent are in the low-wage industries of retail, food and employment services.

And according to the Bureau of Labor Statistics, about one-third of the 3 million Americans who lost their jobs from 2009 to 2011 saw their earnings drop by 20 percent or more upon finding new work.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

“You see workers trading down their living standard,” said Joseph Brusuelas, a senior economist at Bloomberg.

The Times said if it seems like there are more worker protests these days outside of stores like Wal-Mart or McDonald’s, it may be because there are more workers in those kinds of jobs than there were before the recession.

Brusuelas said there is an overabundance of workers, and they are willing to take any job in the sluggish economy.

Legislators in some states such as New Jersey and Illinois are pushing to raise minimum wages there.

The minimum wage was last raised in Illinois in 2006, but the Illinois Policy Institute says it would be a bad idea to hike it again.

“A higher minimum wage means a person has to pay more for each worker,” said Ted Dabrowski, the institute’s vice president of policy.

“Companies have a few choices — increase prices, reduce the number of people they hire, cut employee hours or reduce benefits. When employees become too expensive, they have no choice but to reduce the number of workers.”

However, the Times reported that the Center for Economic and Policy Research found there is little evidence that increases in the minimum wage lead to lower employment, and in fact because higher wages mean workers have more money to spend, employment may actually increase.

The federal minimum wage is $7.25 per hour, but states can set their own rates above that level.

According to Littler Mendelson, a large California law firm that specializes in labor law for business clients, at least seven states are set to raise their minimum wages on Jan. 1, 2013, including Arizona, Florida, Montana, Ohio, Oregon, Rhode Island and Washington.

And potential increases remain pending in other states.

Editor's Note:
Startling Proof of the End of America’s Middle Class. Details in the Video

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