NRF: Minimum Wage Will Increase Welfare Rolls

Discussion
Mar 08, 2005
George Anderson

By George Anderson


The U.S. Senate voted down an amendment introduced by Sen. Edward Kennedy (D – Mass) that would have increased the national minimum wage by $2.10 over 26 months.


Sen. Kennedy’s was looking to attach the minimum wage clause to S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, sponsored by the chairman of the Senate Finance Committee, Republican Charles Grassley of Iowa. (For more on this, check out RW 3/3/05, NRF Calls For Bankruptcy Reform)


The National Retail Federation (NRF) came out strongly against the Kennedy amendment before the Senate vote.


The group’s senior vice president for government relations, Steve Pfister, said in a released statement, “There is little question that a wage increase of this magnitude would have significant consequences on job creation in industries that employ workers in entry-level jobs. With the retail industry in the forefront of moving individuals off welfare and into jobs, a wage hike this large would hurt the very people it is intended to help.”


Moderator’s Comment: What is your take on S. 256 and the minimum wage amendments that were added to it but voted down by the Senate?


There’s no doubt that the bankruptcy system needs fixing. It is also clear there are many people struggling to make ends meet — you can find many of them
making the current minimum wage of $5.15.


We have to agree with the NRF that Sen. Kennedy is wrong to try and add on the minimum wage amendment to S. 256 because it is a good bill that deserves
his support — period.


We would like to offer some advice, however, to the NRF. You need to look beyond the choir if you’re looking to save souls in the pews.


The translation is that S. 256 as introduced by Sen. Grassley deserves support for what it would achieve, namely not giving parties an easy and legal way
out of paying at least some of their debts if they have the means to do so.


As to Sen. Kennedy’s amendment, the NRF should acknowledge that the minimum wage issue is both highly emotional and complex, and deserves consideration
and debate on its own. It should say it would support a dialogue on the subject.


What the NRF should not do is say that raising the minimum wage is going to kill new job creation and put current workers out a job. This is the same argument
that has been made since the Fair Labor Standards Act was made law in 1938. So going back to our church analogy, we would tell the NRF: The choir may be buying it but the pews
never have.

George Anderson – Moderator

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

20 Comments on "NRF: Minimum Wage Will Increase Welfare Rolls"


Sort by:   newest | oldest | most voted
Art Williams
Guest
Art Williams
15 years 11 months ago

It’s hard to believe that there are companies paying less than the current minimum wage, but of course there are. It’s also sad that there has to be a minimum wage law in order to change this, but again that is the way that it is. You might be able to survive on the minimum wage if you are living in a small town in rural America, but there is no way that it will provide the proper food, shelter and essentials in most of our cities and urban areas.

I agree that this situation needs a proper hearing on its own merits and not piggybacked on another bill in an attempt to slip it through. It will likely be difficult or impossible with the GOP controlling both sides of congress but an effort should be made anyway. At the very least it will expose the house and senate voting records on this subject prior to the next election.

Jeff Weitzman
Guest
Jeff Weitzman
15 years 11 months ago

Gene’s right to look in a different direction. Maybe David Livingston’s “radical leftist liberal extremists” are right (no pun intended) or maybe one of the other views they so uncharacteristically present are correct, but the whole concept seems, like so many facets of the labor landscape, to be fighting the last war. Sure, we still need to guard against sweatshop conditions and indentured servitude, but there are better ways and better laws.

Perhaps a new approach is called for, one that takes a more holistic approach and provides incentives for employers to hire full-time workers, with benefits, at living wages, instead of manipulating part-time workers’ hours. Productivity gains should offset some costs; tax credits can recognize the lowering of burdens on government programs, etc. This can’t be a piecemeal approach. If the Bush administration and like-minded forces are bent on dismantling the New Deal, they need to reach out to all sides and come up with a modern approach and a new social compact encompassing work, health care, security, and retirement.

Dale Collie
Guest
Dale Collie
15 years 11 months ago
I’ve long contended that the minimum wage is used by many companies to pay only that amount. When the labor market is tight, those same companies hold onto the minimum wage as though it is somehow a government sanctioned way of paying such low wages. Clearly, if there were no minimum wage, some companies would have to pay more to keep employees. And just as clearly, many of the “illegal alien” jobs that are now “underpaid” would go to US citizens because the company could legally report what is paid to the lower than minimum people who truly would take the work. I can see why the senior senator from MA would want to tinker with the minimum wage … he wants the votes for the Democratic party. If those people on welfare ever escape the Catch 22 set up by the government, they will be a powerful block of voters…for the other team. Do away with the minimum wage. Pay what the work is worth. Pay employees what they are worth.
David Locke
Guest
David Locke
15 years 11 months ago
Have you noticed what has happened with the income tax brackets? They haven’t risen with inflation, so now some upper middle class guy is paying what the wealthy pay in terms of the tax rate. This was driven by the fiction that there hasn’t been any inflation. There has been plenty of inflation just below the level where the CPI would kick in. So what does this have to do with the minimum wage? It has not kept up over the years. Even the proposed rate increases won’t fix that. The proposed rate increases probably mirror the fraudulent CPI. The reality is that you can raise the minimum wage as long as you don’t fix illegal immigration. But, if the government does finally build the southern wall, then your minimum wage workers will find better jobs elsewhere and leave you to raise your rates without federal intervention. It’s OK for minimum wage people to be out of work. The IT recession isn’t over regardless of what you’ve heard. They lost $40K or more of earning… Read more »
Gene Hoffman
Guest
Gene Hoffman
15 years 11 months ago

The insightful comments above leave little platform room for me. Minimum wage has always focused on pay per hours which, as has been clearly noted, can be cut. I suggest the emphasis today should be on institutionalizing a minimum weekly wage.

Mark Burr
Guest
15 years 11 months ago
The interesting thing about this whole thing is that those that propose it could really care less. They are proposing it and playing politics with it to impact reform that impacts their own political interest. There’s really no serious concern about workers earning $5.00 an hour from Ted Kennedy. Come on!! The right thing happened here. George may be right in that wage reform could deserve a debate on its own, but blackmail should be seen for what it is. The whole problem of this issue is that there are two different interpretations of the minimum wage. There is one side that sees the wage as a protection: a means to prohibit abuse. There is the other side that sees it as a living wage and not a minimum. The market has really taken care of the ‘real’ minimum wage. Try and find a worker actually earning it. If there are, they are few. Most are required to pay more simply to attract workers at that level. It’s really a false issue in that sense.… Read more »
Ron Margulis
Guest
15 years 11 months ago

If the economy really heats up, the actual wage companies have to pay, given the supply and demand for unskilled workers, will be close to the amount Sen. Kennedy proposed, making this a moot question. What they should be working on in the senate and everywhere else in government is to make sure the economy stays vibrant by addressing the budget deficit and delivering programs that encourage investment at all levels.

Chris Bemis
Guest
Chris Bemis
15 years 11 months ago

With most companies only giving 3% cost-of-living increases, while the GNP goes at 4-5% per annum, many retail associates are moving backward financially anyway. Increasing the minimum wage will only have the effect of devaluing what experienced hourly employees make.

Bernice Hurst
Guest
15 years 11 months ago

My take on S.256 and my views on minimum wage, like everyone else’s it seems, are two separate questions. Again, like other contributors here to last week’s discussion about bankruptcy abuse, I agree that there is and has been way too much. But like many other laws, I think that this one will protect the wrong people and hurt the wrong people. It seems to me ill-conceived as a means of stopping people determined, devious and clever enough to work the system and just as ill-conceived in offering protection to people who desperately need it because they have got in over their heads through circumstances that they were unable to control and have no idea how to get out again.

As for the minimum wage, it seems to me it should be a safety net which should only rarely be needed in a strong society but has to be in place as a contingency. By that criteria, it has to offer sufficient protection to those who may end up having to rely on it.

Bill Bittner
Guest
Bill Bittner
15 years 11 months ago

I am sorry I didn’t get in on this one sooner.

I agree with the fundamental economic principle that by raising the cost of a factor you will reduce its use. Businesses will find alternatives to the “more expensive” factor by substituting other factors of production.

With that thought in mind, I think Senator Kennedy and much of the discussion on low wage worker income is directed in the wrong direction. What is the cost for operating a Self Checkout System? As more jobs are automated and continued research in robotics and artificial intelligence make it possible to duplicate human function, it is going to become machines that are the biggest competitors for workers. By turning their discussion to “how do we increase the cost of automation?”, I believe government can better serve the constituency they represent. This means taxing the robots and other “service providers” that work for free and displace human beings from productive employment.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
15 years 11 months ago

A close friend earns $14 per hour, the single department she’s managed for eleven years for a 600-store chain has been the top performer in one of their key categories among all those stores for all those years, and her gross annual earnings are at the poverty level. That’s because her employer cuts her hours. An increase in the minimum wage means even fewer hours for her (so others can be paid more) and possible loss of her benefits. Now in her mid-fifties, this is a terrifying prospect for her.

Consider hourly workers in the same boat, who’ve worked hard for years to achieve a higher wage only to be threatened by reduced hours when employers have to pay entry-level workers an additional $2.10 per hour. Only a naïf would assume that seasoned employees will also receive a $2.10 per hour raise. Instead, the gap between pay rates for veterans and entry-level employees would grow smaller and less meaningful to those who’ve spent years in loyal service. It’s enough to make you embrace unionization.

Al McClain
Guest
Al McClain
15 years 11 months ago

If we talk about what people’s work is WORTH, purely in an economic sense, then we don’t need any minimum wage, or any minimum wage increases, because the marketplace will take care of it. The problem is that the free market doesn’t take care of the folks at the bottom end of the line well enough for some of them to live, in any reasonable way.

David Livingston
Guest
15 years 11 months ago
No one has ever been pulled out of poverty by a minimum wage increase and no one’s life has ever been improved. A wage increase only can result in price increases. Where is the money supposed to come from? Without price increases, either jobs will be lost, or business owners will have to take a pay cut. A minimum wage increase will also increase wages for people who earn slightly higher that the current minimum wage. It’s not just the wage increase that is hard on business owners, but added payroll tax too. High wage employers are all for this because it helps squeeze out the lower wage competition. The cruel reality of a minimum wage increase is that it will probably be an overall pay cut for employees because they will qualify for a smaller Earned Income Credit, Food Stamps, and other government subsidies. The government will take away more than what they gain by having increased wages. I call it the hidden tax in the increased minimum wage. I’m sure life is hell… Read more »
Warren Thayer
Guest
15 years 11 months ago

Oh, raise it already! As shoppers, look what minimum wage is getting us for service in stores. As workers, look what minimum wage is getting them in quality of life. Time was, minimum wage allowed you to actually get by. Not anymore. I’ll leave it to the economists to decide how big the increase should be, and at what pace. But I agree with George that these knee-jerk, boilerplate protests are transparent and get us nowhere.

Franklin Benson
Guest
Franklin Benson
15 years 11 months ago
I can scarcely believe people are still rolling out the “increasing minimum wage will increase welfare rolls” argument. That did not happen any of the previous times minimum wage was raised. They offer no reasons why “this time it’s different”. And, for the record, when minimum wage was raised from $4.25 to $5.15, it did make a world of difference for me. You may say that it’s only an extra $36 a week at a forty hour week, but I was working well more than forty hours a week. The overtime wage went from $6.37 to $7.72 an hour, so for a 55 hour week my pay went from $265.62 to $321.87 = An extra 3 grand a year, which is pretty major when at $4.25 and 2000 hours a year you’d be making only $8840 a year. It’s like getting 16 month’s pay for 12 month’s work. Know anyone who would NOT see their life improved by that? People that are willing to put in the hours, work a second job, or do whatever… Read more »
David Livingston
Guest
15 years 11 months ago
They got rid of welfare in Wisconsin. Everyone has to work. I used to know a lot of people on welfare that hung out at the dog track. All of them had a job and plenty of cash to gamble with. Everybody had some “cash under the table” job making decent wages like $8-$12 an hour. Their employers were money ahead because they didn’t have to pay benefits or payroll taxes. The government used to be baffled why so many people on welfare were qualifying for mortgages. They got $13,000 a year in welfare, $5,000 in food stamps, $10,000 a year worth of Medicaid, and probably another $10,000 in Earned Income Credit, rent, utility, and child care vouchers. With making another $15k in cash jobs – it was like making $50k or better a year. Banks used to have no problem giving people on welfare mortgages because they had a guaranteed steady income. Now they have to get a job to replace welfare which means they have a documented income that lowers all the government… Read more »
David Locke
Guest
David Locke
15 years 11 months ago

The minimum wage is an indirect subsidy by taxpayers to those who pay their workers the minimum wage. When that worker goes out and gets on poverty programs, because they are being paid a living wage, it is the owner that is getting free labor. I’m going to object to indirect subsidies long before I object to the worker getting on the poverty programs.

There are too many indirect subsidies already. They cost the taxpayer a heck of lot more than the poverty programs do, and most of those poverty programs turn out to be indirect subsidies as well. Food stamps keep agricultural demand high. Social Security, called by the right “welfare for the elderly,” keeps consumption at a threshold that keeps the banks from collapsing, and reduces employer pension contributions, because of the offset. On and on. It’s sort of like rights; most of our rights seem to accrue to corporations before they accrue to individuals. The minimum wage benefits the employer more than the employee.

Tony Orlando
Guest
15 years 11 months ago

As a small business owner, I pay more to all my employees, except high school kids under 18. If an amendment were put into the bill to keep the under 18’s at say a 50 cent increase in the minimum wage, then you might have support for a bill. Many of these kids appreciate a chance to make a few bucks, and it would kill off their employment chances if a full increase across the board were to pass.

David Livingston
Guest
15 years 11 months ago

I forgot to mention that a few of my old dog track buddies who were on welfare were making six figures. They collected welfare in Michigan, Indiana, Illinois, and Wisconsin. All they would need to do is make the drive once a month to pick up their checks. While some people have been hurt by the cutbacks, I don’t really feel too sorry for the scammers.

David Locke
Guest
David Locke
15 years 11 months ago
Contrary to perception, scammers of any variety are outliers. They are few and far in between. The people getting hurt are MANY, not some. The perception that their are more scammers than legitimate people in programs is media driven. Media highlights the exceptions, not the norms. Did you turn in the scammers you know? That says that the whole line of argument here is moot. I recently took a job that paid much less than I was used to. I had to scrimp and watch my money very closely. I was making more than twice what I made as a stocker some twenty years ago, but guess what, my purchase power had actually declined. “No inflation” has been a myth. This lie has hurt more than MANY people. Minimum wage has failed exponentially on purpose. Tax brackets have failed exponentially. Where did the wealth disappear to? Where is the leak in our economic system? Why did Henry Ford pay his employees enough to afford to own a car? And, what would happen to our industry… Read more »
wpDiscuz

Take Our Instant Poll

Should the national minimum wage be increased?

View Results

Loading ... Loading ...