Although everyone agreed that income inequality is a real problem, panelists at an IUSB Elkhart Center forum Monday night, Feb. 24 disagreed as to whether raising the federal minimum wage could have much impact.
Next month the U.S. Senate is schedule to debate a bill by Sen. Tom Harkin, D-Iowa, that would incrementally raise the minimum wage from $7.25 an hour to $10.10 an hour by 2016. The nonpartison Congressional Budget Office released a report last week finding that the bill would increase pay for more than 16.5 million people and lift about 900,000 people out of poverty. But it could also reduce jobs, ranging from zero loss to 1 million jobs, the report concluded.
IUSB political science professor Elizabeth Bennion brought the panel together for a lively talk.
Tony Flora, president of the North Central Indiana AFL-CIO, noted the minimum wage has not kept pace with inflation. He also sought to dispel the notion that only teens are minimum wage earners.
"Minimum wage workers are not kids," Flora said, noting that most work full-time and are parents. "Eighty-eight percent of all those who earn minimum wage are adults. It's not fun money or some kid earning money at a glorified lemonade stand. The average age of the minimum wage worker is 35."
Arguing against the increase was Kyle Hannon, president/CEO of the Greater Elkhart Chamber of Commerce. Hannon said he has spoken with Elkhart area employers and could find none who are paying minimum wage. He said the minimum wage was never meant to be a "living wage."
"If you are an employer and suddenly your wage scale has jumped up, you're going to cut available openings," Hannon said. "It's simple. That's how you make a profit. So I think you'll start seeing fewer and fewer minimum wage jobs available."
Jim Rogers, associate faculty member in the Leighton School of Business & Economics at IUSB, said he doesn't support the minimum wage hike because it would not do enough to reduce income inequality. Instead, he suggested a three-pronged approach: Pay low-income workers the earned income tax credit monthly rather than in a lump sum with their income tax refund. Allow states or regions to set their own minimum wages because costs of living and other conditions vary so much across the nation. Finally, Rogers called for a "bifurcated" wage scale that would separate young entry-level workers from those who are primary or secondary wage earners in their households.
"For Timmy or Janey who is 16 and in high school, to earn the same as somebody who is earning a living wage as an adult primary or secondary income earner, makes no sense," Rogers said. "Treating the minimum wage in isolation is a false discussion."