Inadequate Wages Won’t Work

As we wait for President Obama’s post-Labor Day speech on employment, it’s a crucial time to be  thinking about job creation, but also an important moment to reflect on the conditions of those who are still employed.

A brief released today as part of the State of Working North Carolina series stresses the importance of  ensuring that workers are paid for the work that they do and that these wages allow workers to support themselves and their families.

The brief notes that wage theft, or the illegal withholding of wages by an employer, is on the rise; that a higher percentage of North Carolina’s working families are currently earning low incomes; and that the state’s lowest-wage earners actually saw a decline in inflation-adjusted wages over the last 10 years. Simply said, more and more families are relying on jobs that don’t pay enough, or in the worst cases, don’t pay at all.

What can we do? We can invest in workers. Paying employees a fair wage is not only essential for allowing workers to put food on the table, it is important tool for stimulating the economy. Increasing low-income worker’s wages puts money into the local economy and reduces employer costs by reducing turnover and increasing productivity.

Americans have long believed that hard work should be rewarded with fair wages. North Carolina has concrete tools at its disposal to turn rhetoric into action. Enforcing protections to ensure that workers are paid for all hours worked, increasing the minimum wage, and making sure that all workers have access to basic wage laws are policies that reinforce the value of work, help struggling families, and accelerate the economic recovery.

6 Comments

  1. david esmay

    September 8, 2011 at 11:30 am

    NC workers will always suffer from low wages for two reasons, one is the right to work, or more aptly a right to fire laws, and secondly the textile mill mentality, as I like to refer to it, that businesses have a right to slave workers at slave wages. The arguement put forth by business leaders that low wages are offset by low prices is pure supply side economic b.s., many are recording record profits while they ask their employees to take cuts in pay, or simply lay them off, and in the end you have no jobs and and no buyers at any price. When Henry Ford needed customers, he gave his workers raises so they could buy the products they manufactured. This is why we need a national industrialization plan like Germany’s. They have high wages and high taxes,100% unionization and give exporters 18% rebates on export sales. The rest of the world has such export rebates and all other countries will trade surpluses have national health whose cost is far less and not all costs are transferred to the cost of goods. With today’s automation and robotics labor comrises just 7% of the cost of manufacturing, so labor is not the problem as Germany proves this, also where MFG goes, so does hightech/design and engineering, and the small businesses that supported the 60,00 factories that closed during the Bush administration.

  2. Rich Paul

    September 8, 2011 at 12:32 pm

    North Carolina is poor because it lacks enough capital to put it’s people to work. If you repeal stupid laws, businesses will flock to hire workers there, driving up wages. If you pass more laws, businesses will go bankrupt or move to places where they are wanted. You cannot be anti-business and pro-jobs.

  3. david esmay

    September 8, 2011 at 12:44 pm

    Businesses may flock here, but it will be for the cheap labor, raising wages will not be a part of the equation. You cannot be anti-worker and pro-business, wait, I’m sorry, NC is.

  4. jlp75

    September 8, 2011 at 1:21 pm

    Just thought I would remind everyone that NC is consistently ranked among the top five of business friendly states, so laws and taxes do not appear to be the huge burden some would have us believe. But I guess these rankings are only valid when they support the position of the right.

  5. Christine Fawley

    September 8, 2011 at 7:56 pm

    Sabine, can you address the question about keeping the state “business friendly” while promoting fair wages? Do the two have to be in opposition? Thanks for this post!

  6. Sabine Schoenbach

    September 9, 2011 at 11:07 am

    Absolutely. Thanks for the question, Chris. First, let’s talk about wage theft. The illegal withholding of wages (workers being paid less than the minimum wage, not receiving overtime pay, or in some cases, not being paid at all) not only keeps earned wages from workers, it creates a race to the bottom for employers, decreases spending power in local communities, and keeps tax revenue from state and local governments. None of this is good for local business.

    Moreover, consumer spending powers our domestic economy and allows local businesses to create jobs and expand. Wage hikes, in general, have a stimulative effect by increasing spending in local communities. According to a study by the Federal Reserve Bank of Chicago, after a $1 minimum wage hike, spending is increased by roughly $700 per quarter for households with minimum wage workers. The Economic Policy Institute estimates that President Obama’s proposal to $9.50 by 2011 would generate $60 billion in new consumer spending. Economists point out that low-wage workers will put these extra earnings directly back into the economy.

    Moreover, a large body of research has shown that raising the minimum wage during high periods of unemployment does not cause job loss. In fact, wage increases bring benefits to businesses that can offset some of their costs, for example by reducing employee turnover and increasing worker productivity.

    In short, those who work full-time should not be living in poverty and being “business friendly” is not inconsistent with the promotion of fair wages.