Millard Grimes: "Seven and a half cents …"

June 16, 2014 

One of the few popular plays or movies made about labor unions was the Doris Day musical comedy "The Pajama Game," based on the Broadway play "Seven and Half Cents."

The title refers to the hourly pay increase the union was trying to get from the company, which made pajamas. Doris Day as the union representative was obviously a bit out of character, but, as usual, Doris carries it off beautifully.

In today's economy seven and a half cents an hour certainly doesn't seem very much, but it adds up.

The most divisive economic fight in Congress this summer is expected to be over raising the nationwide minimum wage from $7.25 an hour to $10.10 an hour. It would be the first increase in the real minimum wage since Congress approved an increase from $5.15 to the current $7.25 in May 2007.

A lot of dollars have changed hands since then, mostly to the "maximum wage" earners, but no increase to the minimum wage earners. Can't be done, say dissenters, would be inflationary; millions of low-wage earners would lose their jobs; companies can't afford to raise the lowest wage -- only the highest.

It's not exactly relevant, but the sale of the Los Angeles Clippers illustrated the crazy way our economy distributes monetary rewards today. The owner of the Clippers is accused of making racist remarks and forced to sell the team for $2 billion, which happens to be the largest amount ever paid for an NBA team, and the second largest for any pro team. Was the team worth that? Not according to most current evaluations. For instance, two billion would buy all three of the pro teams in Atlanta.

So take that, Mr. Sterling, and watch what you say about who your girlfriend is dating next time.

But getting back to raising the minimum wage, which has nothing to do with the maximum, is that the way to stimulate the economy still in the doldrums?

The surest way, as I've suggested in past columns, would be to restore the 2 percent cut in the payroll tax, which was adopted in 2011 and then repealed in the New Year's Eve 2012 compromise to keep the government operating in 2013.

That 2 percent tax cut was in effect for the tax years 2011 and 2012 and affected about 80 percent of all wage earners in the country, including minimum wage workers.

Significantly, in those two years the moribund economy began to show signs of recovering from the Great Recession that began in 2008.

What was the dollar effect on a minimum wage worker? In 2008, the $7.25 an hour worker would earn about $290 a week for 40 hours, so the 2 percent FICA cut amounted to about $6 a week, "Not a heck of a lot, but give it to me every hour, every week" and it comes out to about $300 a year.

A minimum wage increase to $10.10 would bring a minimum wage worker an increase of about $114 a week when fully implemented and that is a worthy goal, but can it be achieved in today's Congress, or more pertinently in the Congress that is likely to emerge from the November elections? It's not likely.

But the payroll tax cut was approved by a Congress that was similar to the current one. So, for the economy and the workers, getting a surer bill approved would provide relief without the danger of losing some jobs at the lowest pay levels.

A number of states have already raised their minimum wage even higher than the proposed new national wage, so any relief in the payroll tax would give workers in those states additional spending money. And spending money is the key need here. A minimum wage increase or a payroll tax cut would provide money to these consumers who are likely to put every penny back into the economy -- to businesses that provide necessities to most Americans, necessities that don't include second-rate pro basketball teams, which are examples of what is sucking too much money out of the economy.

A decrease in the payroll tax could be made up by lifting the ceiling on payroll taxes from $110,00 a year to $115,000.

Those in Congress opposed to a minimum wage increase might accept a lower payroll tax of even 3 or 4 percent as a compromise, especially if the decrease included the matching amount of the payroll tax which an employer must pay, and which is often a major cost item for small businesses.

The minimum wage is one issue on which Georgia voters will have a clear choice in the November Senate race. Michelle Nunn, the Democratic nominee, says in every speech that she supports raising the minimum "and that we give people an opportunity for self-sufficiency." David Perdue and Rep. Jack Kingston, now in a runoff for the Republican nomination, both oppose an increase, arguing that it would "present one more roadblock to entry-level employees."

A survey by Equifax, a Georgia-based credit reporting agency, showed that Georgia, South Carolina and Mississippi have the most workers who would benefit from a higher minimum wage. Equifax also found that nationwide about 90 percent of workers in their teens earned less than the proposed minimum and that 60 percent of women made the minimum.

An increase would help, but the lower payroll tax would be more certain of passage.

Millard Grimes, editor of the Columbus Ledger from 1961-69 and founder of the Phenix Citizen. is author of "The Last Linotype: The Story of Georgia and Its Newspapers Since World War II." A profile of Grimes can be found in the Georgia Encyclopedia, www.georgiaencyclopedia.org.

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