You are hereTruthout: Raising the Minimum Wage Is Good for Business (But the Corporate Lobby Doesn't Think So)

Truthout: Raising the Minimum Wage Is Good for Business (But the Corporate Lobby Doesn't Think So)

-By Peter Dreier and Donald Cohen

February 22, 2013- Contrary to naysayers in the business lobby, numerous studies suggest increasing the minimum wage to $9 an hour and tying it to the cost of living will lift millions of Americans out of poverty and stimulate the economy.

As soon as President Barack Obama called on Congress to raise the minimum wage to $9 an hour in his State of the Union address last week, you could see Speaker John Boehner, seated behind the president, uttering his religious mantra: "Job killer." And even if you couldn't read his lips, you could read his mind: "Campaign contributions." He and his Republican colleagues could expect huge donations from business lobby groups - especially those that depend on low-wage workers, like the hotel industry, restaurants and fast-food chains, nursing homes and hospitals and big-box retailers - to keep Congress from embracing Obama's modest proposal.

Boehner's "job killer" grumble should come as no surprise. Business groups and their political allies have been "crying wolf" about the minimum wage ever since President Franklin D. Roosevelt proposed it during the Depression to help stimulate the economy. The critics warned that enacting a minimum wage would destroy employees' drive to work hard and would force many firms out of business. The minimum wage law, warned the National Association of Manufacturers (NAM) in 1937, "constitutes a step in the direction of communism, bolshevism, fascism, and Nazism." Congressman Edward Cox, a Georgia Democrat, said that the law "will destroy small industry." These ideas, Cox claimed, "are the product of those whose thinking is rooted in an alien philosophy and who are bent upon the destruction of our whole constitutional system and the setting up of a Red Labor communistic despotism upon the ruins of our Christian civilization." Roosevelt and most members of Congress ignored these warnings and adopted the Fair Labor Standards Act in 1938, establishing the federal minimum wage of 25 cents an hour.

Since then, each time Congress has considered raising the minimum wage, business groups and conservatives have repackaged the same arguments. In 1945, NAM claimed that, "The proposed jump from an hourly minimum of 40 to 65 cents at once, and 70 and 75 cents in the following years, is a reckless jolt to the economic system. Living standards, instead of being improved, would fall - probably to record lows." Instead, the next three decades saw the biggest increased in living standards in the nation's history.

In 1975, economist Milton Friedman, a conservative guru, said: "The consequences of minimum wage laws have been almost wholly bad, to increase unemployment and to increase poverty. In my opinion there is absolutely no positive objective achieved by minimum wages." While campaigning for president, Ronald Reagan said, "The minimum wage has caused more misery and unemployment than anything since the Great Depression." In 2004, David Brandon, the CEO of Domino's Pizza, declared: "From our perspective, raising the minimum wage is a job killer." Earlier this month, Jason Riley, a Wall Street Journal editorial writer, called the minimum wage a "proven job killer" on the newspaper's cable talk show.

Following Obama's State of the Union address, business representatives and conservative media pundits echoed the same talking points. Analyzing Obama's speech for Fox News, Nina Easton, an editor for Fortune magazine, repeated the claim that increasing the minimum wage is a "job killer." Michael Saltsman, research director at the business-backed Employment Policies Institute, told Fox Business News that "minimum wage hikes lead to job losses." Bill Herrle, executive director of the National Federation of Independent Business' Florida affiliate, told Sunshine State News that Obama's plan was a "job killer."



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