PUBLISHED BY EL NUEVO HERALD ON MARCH 21st, 2014
The last wage increase in Florida was 14 cents in January 2014, according to the automatic cost of living adjustment approved by voters in 2004; However, this increase is still far from the true current currency purchasing power; consumer goods purchased with $ 1.60 in 1968 would cost $ 10.20 today, according to the consumer price index.
Clearly, the current minimum wage of $ 7.93 an hour and $ 4.91 for those who earn most of their pay in the form of tips, is insufficient.
Many might think that an increase in the minimum wage would lead to a fiscal debacle underpinned by the inability of businesses to assume higher costs, which ultimately would lead to the bankruptcy of many and rising unemployment. Nothing is further from the truth.
According to research by UC Berkeley and University of Illinois, who are actually paying the consequences of inadequate wages are taxpayers; 73% of families in EE.UU., who receive up to $ 243 billion per year in benefits such as Medicaid, food stamps and "Earned Income Tax Credit", are currently working, but their income is so low that they qualify for these benefits .
Moreover, US companies who would be most impacted by a 27% increase in the minimum wage, would be those with high labor intensity, ie manufacturing. But what are the factories that remain in the United States?
The fast food industry, McDonalds type, is a major employer. It is estimated that 12% of all businesses in America are franchise type with sales totaling 43% of total sales in the country.
In Florida an estimated 50,000 people work in this sector, of which 28,000 are under public assistance due to low income they receive.
How a major employer like this would support a wage increase? There are two viable ways. Franchisees pay an average of 10% of their gross income to the owners of the brand. Reducing that payment only 1% would be sufficient to offset this cost.
The other way would be to increase the selling price of hamburgers at 25 cents. The sales would be unaffected and spending will be covered.
Now, the benefits to the economy would be extraordinary. The Congressional Budget Office believes that raising the minimum wage will benefit 15% of employees and 900,000 nationwide would no longer be poor.
According to the Comptroller of the State of New York, last year Wall Street firms offset their 165,200 employees with $ 26.7 billion bonds. It is estimated that each extra dollar a low profile employee receives, benefits the economy by $ 1.21. Instead, the same additional income for high-income person contributes only 39 cents to GDP.
According to the Department of Labor of the United States, by 2012 there were 214,000 people in Florida working with or below the minimum wage, not including overtimes, commission or tips.
If these people, along with a portion of the total 4.164 million hourly workers in Florida, you increase their salary to $ 10.10 per hour, the demand for goods and services would increase in the short term.
Supply needed to satisfy purchases will increase employment. Some prefer saving to install their own businesses. Retail sales will multiply.
For example, in New Jersey, they increased wage from $ 1.00 to $ 8.25 per hour. In a short time more than 8,000 new jobs were created.
The state of Washington, for the past 15 years has been the leader among the highest minimum wage in the nation, having now $ 9.33 per hour. There the economic growth is 0.8%, the highest in the nation.
The State of Florida should not be left behind. Raising the minimum wage is not only humanitarian but also is beneficial for all, the public and private sector. Go Ahead !!!
BENJAMIN F. DeYURRE
Economist and Journalist
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