Bernie Sanders on the Minimum Wage

Bernie Sanders is at the forefront of the fight to make the minimum wage a living wage. Over the past 40 years, the cost of living has increased significantly while workers’ wages have stayed relatively flat, despite commensurate increases in productivity levels. Meanwhile, CEO pay is up nearly 1000 percent since 1978 — a figure that is double the stock market growth over the same period. In other words, all of the new wealth created in the last 25 years or so has gone straight to the top one percent, leaving most workers behind.

Current State of the Minimum Wage

Bernie believes that American workers are way overdue for a raise in the minimum wage. While addressing hundreds of low-wage workers on strike for a living wage in July 2015, Bernie stated,

“It is a national disgrace that millions of full-time workers are living in poverty and millions more are forced to work two or three jobs just to pay their bills. In the year 2015, a job must lift workers out of poverty, not keep them in it. The current federal minimum wage of $7.25 an hour is a starvation wage and must be raised to a living wage.”

Why do we need a higher minimum wage?

The effects of low wages can be viewed as a ripple effect throughout the economic and social spheres. As wages decrease, there is a consequential decrease in real purchasing power and workers are inclined to take on more work in order to subsist. Nearly 40 percent of hourly-paid workers are now working over 40 hours a week. A family struggling to subsist on a lower income will also have greater difficulty adequately caring for its children.

This can include struggles such as putting away savings toward higher education, feeding the children a healthy diet, having the leisure time and money to accompany a child during play or take them to extracurricular activities, and being unable to clothe or house them adequately — all important factors in the future outcomes of children. These negative consequences on child outcomes create a cyclical effect, and children born in poverty are more likely to continue to be poor. In short, the effects of a non-living wage are not only felt by individuals who receive it, but by all sectors of society.

On top of all of this, because the minimum wage is currently so low, many workers earning the minimum wage receive public assistance from the federal government in order to support themselves and their families. Therefore, according to the Economic Policy Institute, raising the minimum wage by just a few dollars would cause 1.7 million Americans to no longer rely on public assistance and “reduce government expenditures on current income-support programs by $7.6 billion per year”.

But if people making minimum wage are frugal enough, won’t they be fine?

No. According to the National Low Income Housing Coalition, if a family needs to rent just a modest two-bedroom apartment anywhere in America, the lowest compatible wage would be $12.95 in Arkansas. An overview of this report shows that in 2015, the two-bedroom national housing hourly wage requirement is to earn at least $19.35 per hour and to not spend more than 30 percent of that income on the rent. Otherwise they wouldn’t be able to afford other basic livelihood necessities! The report also shows that in no state can a minimum wage worker afford a one-bedroom rental unit at Fair Market Rent by working a standard 40-hour work week without paying more than 30 percent of their income.
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And not only can they not pay rent, people living off the current federal minimum wage sometimes can’t pay for food. According to the National Center for Childhood Poverty, some 22 percent of American children live below the poverty level of $23,550 a year for a family of four. However, research shows that to cover basic expenses, a family of four needs at least $44,700 a year, nearly twice the poverty level. When considering this, approximately 45 percent of children live in low income families. Such high levels of children living in poverty or low income families is frankly hard to explain in such a wealthy country.

A Department of Labor study concluded that if the minimum wage had been raised to only $8.20 — less than a full dollar — in 2013, it would have enabled 7 million Americans to no longer face food insecurity. And if it was raised to $10.10 in 2015, 12 million Americans would no longer have to worry about feeding themselves and their families at nutritionally sufficient levels.

What has Bernie said about the current state of the minimum wage?

Best to let him do the talking. Watch Bernie passionately discuss the minimum wage during a 2013 Senate hearing:

Worker Productivity & Inflation

Bernie is one of the very few congressional leaders to talk about how American workers are more productive and work longer hours than they ever have before, and more than workers in any other industrialized nation. In a June 2015 op-ed, Bernie wrote:

“Here is the reality of the American economy. Despite an explosion in technology and a huge increase in worker productivity, the middle class continues its 40-year decline. Today, millions of Americans are working longer hours for lower wages and median family income is almost $5,000 less than it was in 1999.”

Great — what are actual economists saying about this, though?

According to the Economic Policy Institute, American workers are the most productive in the world, but their wages have not kept up with inflation since 1968.

Per the Senate Budget Committee Blog:

“The real, inflation-adjusted, value of the federal minimum wage has fallen dramatically over time. The real value of the federal minimum wage peaked in 1968 at 10.85 an hour, 50 percent above the current level. Moreover, since 1968, average U.S. labor productivity has risen by roughly 140 percent. This means that, if the federal minimum wage had risen in step with both inflation and average labor productivity since 1968, the federal minimum wage today would be $26.00 an hour.”

But there’s so much money being made in America. Where is it all going?

It’s going to the top! The average inflation-adjusted CEO compensation is up 997 percent since 1978. Today, the ratio of CEO to average worker compensation is at least 235 percent higher than when it started to skyrocket in 1991 to obscene amounts and continued to rise throughout the decade.

The study further shows that CEO annual compensation was the only type of compensation that showed any sort of consistency in keeping up with inflation.

If I work longer hours, will I make more money?

It’s certainly what former Florida Governor Jeb Bush is saying as he campaigns for the Republican presidential nomination, but unfortunately that doesn’t appear to be the case.

The graph below clearly illustrates the productivity and compensation disparity working Americans face:

How did Bernie respond to Jeb Bush’s comments?

He set him straight. Watch it happen.

Corporations Exploit the Minimum Wage

When businesses fail to pay their workers a living wage, workers increasingly depend on social services paid for by middle-class taxpayers. Bernie has called this “Welfare for Walmart.”

What does “Welfare for Walmart” refer to?

It’s a reference to the fact that the retail behemoth Walmart costs taxpayers $6.2 billion each year in food stamps, health care costs, and other government programs because it pays the vast majority of its employees so little that they require public assistance to survive. Important to note is the Walton family, Walmart’s largest shareholders, is the wealthiest family in America, estimated to be worth $148.8 billion or more than 49 million American families’ net worths combined.

During a 2014 Senate hearing on the minimum wage Bernie asked:

“Walmart pays its employees so little that many of the low-wage workers must rely on food stamps to feed their families and Medicaid to pay doctors when their children get sick. Do you think the wealthiest family in this country should have large numbers of employees that depend on Medicaid?”

So what does this have to with the minimum wage?

Everything. Because the minimum wage is so low — a “starvation wage,” according to Bernie — companies like Walmart can exploit both workers and American taxpayers, by forcing its employees to heavily depend on public assistance programs to survive.

Watch Bernie question a representative from the Manhattan Institute of Policy Research, a conservative American think-tank, on Walmart and the minimum wage in this 2014 hearing:

Economic Growth

Bernie has proposed an amendment to make the minimum wage a living wage by increasing the federal minimum wage in increments to $15 per hour by 2020.

How does today’s minimum wage of $7.25 per hour compare to levels set in the past?

Placed in a historical context, the current federal minimum wage represents a serious decrease of purchasing power with respect to increases in cost of living over the past 40 years. Had minimum wage risen with the inflation and productivity increases since 1968, the minimum wage today would be closer to $26 per hour.

Will increasing the minimum wage lead to fewer jobs?

There is an increasing amount of evidence that shows that workers’ pay hikes ultimately lead to stronger job growth. Plus, this would not be the first time the country has increased the minimum wage or even doubled it, as Bernie has proposed. In 1949, President Truman lead precisely the same charge and the country saw unemployment decrease over the next several years to a 10-year low by 1953.

Moreover, Bernie’s home state of Vermont, along with other states that recently raised the minimum wage, seem to be doing just fine. In 2014, the states that raised their minimum wages experienced more job growth than states that didn’t.

Job loss is mitigated on two fronts when raising the minimum wage:

  1. If you put money in the hands of low-income people, they spend it.
  2. Increased wages means some minimum-wage earners who are working two to three jobs to make ends meet can reduce hours, thereby opening up employment opportunities for those that have no job.

Won’t increasing the minimum wage harm small businesses?

Many conservatives claim that this is the case, but the evidence does not support it. Seattle, one of the cities to more recently raise the minimum wage to $15, has seen large increases in employment and income. According to MyNorthwest.com, not only have many of the businesses who opposed the increase seen higher employment numbers, some are even opening additional locations. In 2014, a study by the Center for Economic and Policy Research found that the 13 states that increased the minimum wage saw employment numbers increase faster than states that did not, an average of 0.85 percent compared to 0.61 percent in the other 37 states.

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Several studies over the last 15 years have shown that increasing the minimum wage lowers employee turnover. CostCo saw just 17 percent overall turnover (compared to the industry average, which was around 44 percent), and only six percent after one year, as well as a massive decrease in employee theft in 2005. In 2003, the San Francisco Airport raised the minimum wage of employees to $10/hr and saw an 80 percent decrease in turnover among airport security screeners, a 44 percent drop among cabin cleaners, and 25 percent drop among ramp workers. The reduction in turnover saved companies $6.6 million. In 2004, San Francisco saw an average increase in length of employment of 3.5 months, and saw six percent of workers move from part-time to full-time.

And many small business owners support an increase. A joint report by the American Sustainable Business Council and Business for a Fair Minimum Wage in July of 2014 shows that 61 percent of small business owners surveyed support raising the minimum wage to $10.10/hr and tying it directly to cost of living. Additionally, 53 percent of the same business owners agree that a higher minimum wage lowers turnover, while boosting productivity and customer satisfaction.

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Another report from Small Business Majority in July of 2015, shows that 58 percent of small business owners paying $12/hr or less support raising the minimum wage to $12.

More specifics on Bernie’s stance on small business can be found on the Small Business and Entrepreneurship issue page.

What’s Bernie’s legislative record on the minimum wage?

Bernie has been pushing for a higher minimum wage for most of his political career. In 1993, he introduced one of his first pieces of legislation, the Liveable Wage Act of 1993. He then re-introduced the bill in 1995, 1997, and 1999.

In 2001, he introduced the Minimum Wage Restoration Act and went on to co-sponsor several other similar bills over the next decade. In 2013, he proposed and argued for a budget amendment to raise the minimum wage to $10.10 per hour.

In July 2015, Bernie proposed a new amendment that would make the federal minimum wage $15 per hour. Bernie’s latest legislation was preceded by a letter from 200 professional economists recommending raising the federal minimum wage to that same $15 per hour level. The economists estimate that 76 million Americans stand to benefit from raising the minimum wage.

Here’s Bernie introducing his legislation:

What else is Bernie doing to promote more economic opportunities for working Americans?

In addition to increasing the minimum wage, Bernie has proposed legislation which would increase employment opportunities, education, and training for young workers, and provide decent-paying jobs to all Americans that want them. Learn more about his other policies for working people.