Raising minimum wage good for Michigan

Contact: Judy Putnam at (517) 487-5436

Minimum wage raise could boost economy, create jobs in Michigan

LANSING, Mich. — A raise in the minimum wage would benefit not only low-income families and children, but also Michigan’s economy by creating jobs and boosting economic activity, according to a new report released by the Michigan League for Public Policy.

Contrary to common assumptions, most minimum-wage earners are not teenagers working for pocket change. Rather, a great majority of them are adults 20 years or older, who work 20 hours per week or more, and contribute a significant amount to their total family incomes. Almost a quarter of these workers are also parents supporting one-fifth of Michigan’s children, according to Raising the Minimum Wage: Good for Working Families, Good for Michigan’s Economy.

“No one who works hard should be forced to work for poverty wages, whether they are parents supporting young kids, or teenagers who are just starting their working lives,” said Gilda Jacobs, president and CEO of the Michigan League for Public Policy. “But this is exactly what we’re asking many minimum-wage workers to do — to put in their time at work and still remain poor.”

Over the past four decades, the value of the minimum wage has dropped by 20 percent, leaving many families struggling to provide for their children. If the minimum wage is not increased and indexed to inflation, its value will drop another 15 percent by 2022.

At the current rate of $7.40, earnings from full-time, year-round work no longer suffice to keep families above the poverty threshold ($15,825 for a family of two and $18,498 for a family of three).  But back in 1968, when the value of the minimum wage was at its highest, a single parent could raise two children on minimum wage while avoiding dire poverty.

Raising the minimum wage to $10.10 would increase the annual incomes of over 1 million Michigan workers by an average of $2,256. While this raise would have a modest short-term impact on low-income families’ budgets, it is a step in the right direction in the long-term – particularly for addressing the high level of childhood poverty in the state, which currently stands at 25 percent. Studies have shown that each additional $1,000 in household income for low-income families results in greater academic performance for young children.

“Raising the minimum wage will benefit working families who are the backbone of our communities,” according to Frank Houston, spokesperson for Michigan United, a statewide coalition of faith and social justice organizations, which has been active in rallying support for a raise in the minimum wage. “We need an economy that works for all of us, not just those at the top.”

Boosting the minimum wage would be good for Michigan’s economy. In general, low-income workers quickly spend any additional income they obtain, which benefits the local economy. The $1.09 billion in increased economic activity expected from a raise in the minimum wage could also result in the creation of 4,600 full-time jobs.

While an increase to $10.10 has been proposed at the federal level, Michigan lawmakers have introduced similar legislation that would raise the state’s minimum wage to $10 per hour by 2016. The bills – SB 203 introduced by state Sen. Bert Johnson, and HB 4554 introduced by state Rep. Rashida Tlaib – would also index the state’s minimum wage to inflation to prevent the erosion of its value over time.

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The Michigan League for Public Policy is a nonpartisan, nonprofit research and advocacy organization dedicated to economic opportunity for all. It convenes the Prosperity Coalition.