Minimum wage bill only the first step for economy

March 20, 2006 —

The federal government has not passed a minimum wage increase since 1997. The minimum wage is at its lowest level in real dollars since the 1950s, forcing thousands of working families - and college students - to scrape by. Last week, the Michigan House - following unanimous Senate passage a week prior - voted to raise the Michigan minimum wage to $6.95, effective October 1. Governor Jennifer Granholm is expected to sign the bill into law, which would also raise the minimum wage to $7.15 on July 1, 2007 and to $7.40 on July 1, 2008.

On the surface, this bill appears to remedy federal inaction in the Republican-dominated Congress. Yet, like many things in life, the devil lies in the details. State Republicans are conceding that the bill was passed to take the air out of the sails of a proposed constitutional amendment that would raise the minimum wage to $6.85 an hour on January 1, 2007, as well as index the wage for inflation every year. Republican leaders realize that the amendment, which would be on the November ballot, would likely bring supporters to the polls at the same time Granholm - who supports the amendment - is up for reelection against Republican challenger Dick DeVos, who hasn't publicly stated a position on minimum wage increases.

The passage of the minimum wage increase is an example of overdue legislation that comes too little, too late. Republican legislators have failed to see the overwhelming majority that supports minimum wage increases: a 2005 poll by EPIC/MRA of Lansing shows a whopping 80 percent of Michiganders support increasing the minimum wage; in 2004, Nevada and Florida residents voted nearly 2-1 to increase their state minimum wages. Genuine, bipartisan support for increasing the minimum wage makes it a near-guarantee for the amendment to pass.

Looking at the numbers shows why. Assuming a conservative estimate of 2.6 percent in the yearly inflation rate, the minimum wage under the constitutional amendment would not increase to the $7.40 wage until 2010. This is a full year and a half behind the wage written into the bill passed by the Michigan Legislature.

This may seem like a bad thing, but in actuality, the constitutional amendment makes sense fiscally and politically. The move is fiscally sounder under the amendment because the minimum wage raise will be more gradual, and will not impact businesses as quickly as the legislature's bill. Second, the minimum wage bill passed by the Legislature is just that - a bill, one that could be repealed through new legislation once the election is over.

Think this couldn't happen? Suppose that DeVos defeats Granholm in the 2006 gubernatorial election, and Republicans maintain control of the State Legislature. Together, they could pass a bill that would revert the state minimum wage back to the federal level, and Granholm would not be in office to veto the legislation. Business groups such as the Chamber of Commerce already oppose the minimum wage legislation, feeling it will lead to higher labor costs, which will cause an increase in Michigan's already high unemployment rate. Under the guise of making Michigan competitive for jobs, DeVos and the Legislature could pull the plug on the minimum wage hike while it is still in its infancy.

Normally, we would be supporting the Legislature's minimum wage hike wholeheartedly. But the constitutional amendment prevents political recalcitrance once the election season is over. It is highly unlikely that opponents would be able to get the 350,000 signatures needed to put a minimum wage reduction amendment before voters anytime soon. The amendment's inflation index also makes it worth supporting. It has been nine years since an increase; if another increase didn't occur until 2015 - nine years - the bill's wage would only be $7.40, while the wage under the constitutional amendment would be nearly $8.63 an hour, again assuming an annual 2.6 percent inflation rate.

Myopic politicians should not be roadblocks to the more sensible constitutional amendment's passage. Giving working-class families slightly more money a week - roughly $60 to $70 - isn't going to wreak a catastrophe on Michigan's economy. If anything, increasing the minimum wage will help the economy, as working-class families may be able to save up to purchase a new television that, under the old minimum wage, would have been out of reach. Giving Michigan's poorest more money will create more purchasing power from all demographics.

Michigan's economy may continue to lag behind that of other states, but there is one statistic that cannot be quantified - human decency. Multimillionaires like DeVos may receive slightly less in income, but taking minute portions from a privileged few to help the working masses is a no-brainer. Regardless of which version of the minimum wage increase ultimately makes it into law, Michigan is taking a leap toward a more equitable society.