Raise Michigan raises hope

The possibility of a long-overdue increase to Michigan’s minimum wage is on the horizon with the kickoff of the Raise Michigan campaign to put the issue before voters on the fall ballot.

If successful, it will raise Michigan’s $7.40 an hour wage minimum wage to $10.10 over three years and index it to inflation. It also includes a gradual increase of the $2.65/hour “tipped” wage for restaurant servers.

With so many problems to report on – rising income inequality, growing number of low-income working moms and shrinking windows of opportunity for our young people – it’s good to be able to talk about a positive solution.

Raising the wage would reduce the state’s poverty rate, decrease reliance on state assistance and boost local economies.

An increase would boost the incomes of nearly 1 million Michigan workers. Despite oft-repeated statements from opponents to the contrary, only 13% of that group are teens. Most are 20 and over and many are parents. In fact, 15% of all children in the state have a parent earning the minimum wage.

The proposal will index it to inflation. Without indexing, the minimum wage loses purchasing power over time. Since 1968, the minimum wage has lost more than 30% of its value, despite a few increases along the way.

Make sure to stay informed on this important development. There’s much work ahead – the campaign has until May 28 to collect nearly 259,000 valid signatures and there will be many volunteer opportunities. Make sure to connect at www.raisemichigan.com.

– Gilda Z. Jacobs

League vs. Mackinac Center on the minimum wage

Recently, I’ve had two opportunities to debate the Mackinac Center on the minimum wage. The events took place at the Hauenstein Center of Grand Valley State University and on a public affairs show on WGVU, the public station at Grand Valley.

The minimum wage has been on the minds of many lately – particularly after fast-food workers held rallies and called for an increase to $15 per hour, and a ballot campaign formally launched last month.

On one side of the debate are those who understand that $7.40 is too low – at this wage, full-time work is just $15,400 annually. On the other side are those who are opposed to increasing or even having a minimum wage at all.

During the debates, I argued in favor of raising the minimum wage and indexing it to inflation – a measure that would benefit 1 million Michigan workers. My debate opponent proposed abolishing the minimum wage.

The debates touched on several points, including:

  • Are minimum wage earners teens or adults? Opponents of the minimum wage argue that this wage is mostly earned by teenagers, and therefore not a pressing policy issue. However, evidence suggests the contrary. In Michigan, 87% of workers who earn at, or just above the minimum wage, are at least 20 years old.  (Nationally, their average age is 35). Further, 20% of these workers are parents raising 15% of Michigan’s children. The changing demographics of low-wage workers suggest that this is an economic issue that we must confront now, so we’re not asking low-wage adults to live in poverty, or parents to turn to public assistance to support their children.
  •  Would an increase hurt jobs and the economy? My debate opponent referred to studies claiming that job losses are an inevitable result of raising the wage floor. However, more recent studies show that neither job losses nor gains should be expected in significant numbers. Nonetheless, if Michigan increased its minimum wage to $10.10, the state could see a small boost in employment – 3,300 full-time jobs – and an increase in economic activity – $886 million. These modest improvements make sense when we consider that, when low-wage workers have a little more money in their pockets, they tend to spend it right away (mostly at local businesses) to purchase basic necessities. Over time, increased spending leads to a higher demand for workers to staff local businesses or create more of the products being consumed.
  •  Would increasing the minimum wage hurt small businesses? My opponent argued that Walmart supports an increase because this would eliminate its small business competitors. While it is true that nearly a decade ago, Walmart “urged” Congress to increase the minimum wage, it did so while hiring anti-minimum wage lobbyists. My opponent also failed to mention that, rather than being concerned, small business owners support an increase and many already pay their employees a wage higher than the minimum.

We need an economy that works for everyone, including our lowest-paid workers. Increasing the minimum wage, so that hard work is fairly compensated, is a first step to building such a fair economy. For more information, see the League’s fact sheet and report on raising the minimum wage.

– Yannet Lathrop

EITC is perfect vehicle for the governor

From the League’s First Tuesday newsletter
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Gov. Rick Snyder unveils his fourth executive budget Wednesday and worthy of applause is the fact that he has rejected the across-the-board rollback of Michigan’s personal income tax.

The governor indicated in his State of the State address last month that he wants a tax cut but one that is targeted to working families — those “hardworking Michiganders who get up every day and pack their lunch and go to work.”

The good news is that there is a vehicle already in place to deliver exactly what the governor is seeking: the Michigan Earned Income Tax Credit. As a new fact sheet from the League shows, the tax credit is one of Michigan’s most effective tools for supporting working families and reducing poverty.

Using the $100 million the Snyder administration has targeted for tax relief to increase the EITC would help the very workers the governor wants to help, and it would boost the economy. That could lift the EITC from 6% of the federal credit to 11% of the federal credit. For a working mom with four growing boys, like Paula Fekken of Traverse City, that would mean $300 more for car repairs and other necessities to keep her on the job.

A new report by the Center on Budget and Policy Priorities documents the benefits from state EITCs: They keep working parents on the job and children out of poverty.

Unfortunately, the income tax rollback is gathering steam in the Legislature with a Senate hearing. The tax cut fever is driven by higher-than-expected revenues, nearly $1 billion over three years. It’s a strong election-year temptation as GOP lawmakers look to defend their records for the damage done to working families and seniors in the Big Tax Shift of 2011.

Yet, as the League testified at the Senate hearing last month the income tax rollback disproportionately benefits upper-income households and threatens Michigan’s fragile recovery. In fact, $3 of every $5 would go to those in the top 20% of income.

Increasing the EITC or spending the higher-than-expected revenue to begin restoring Great Recession cuts to education and other key services would also be better economy-boosting routes than the across-the-board income tax cuts.

Either choice would help the governor reward hard-working folks in Michigan.

– Gilda Z. Jacobs

Rolling back progress

The Senate Finance Committee Wednesday approved a bill to reduce the state’s personal income tax rate from 4.25% to 3.9% by 2017, a move that would reduce state revenues by up to $874 million when fully implemented in Fiscal Year 2018.

While the purely political appeal of a tax cut during an election season is obvious, the League testified, based on a recently released report, that the risks to Michigan’s economy far outweigh any benefits. Low- and moderate-income workers will see little in return while the wealthiest taxpayers would benefit the most. (more…)

Early reading critical

Michigan is losing ground on a key benchmark in its long-term goal of expanding its educated workforce. The state is among only six that showed no improvement in reading proficiency among fourth-graders over the decade between 2003 and 2013, according to a just released Data Snapshot from the Annie E. Casey Foundation.

Almost seven of every 10 Michigan fourth-graders did not demonstrate reading proficiency in 2013—up 1 percentage point from 2003 while the national average dropped by 4 percentage points, according to the review of national test results across the states. Just over half (53%) of all fourth-graders in the best state, Massachusetts, scored below proficient in reading compared with almost four of five Mississippi fourth-graders. (more…)

Priorities Michigan launch

Last week marked the launch of a new organization, Priorities Michigan, a civic engagement and education project aimed at changing the conversation around the state budget and promoting needed investment in public goods.

The Michigan League for Public Policy is proud to be a partner organization on this as we join with others to highlight the effects of over a decade of devastating budget cuts to schools, communities, higher education, infrastructure and human services. (more…)

Tax cuts won’t grow the economy

A new report by the League demonstrates that across-the-board cuts in the state’s personal income tax would not boost Michigan’s economy, but could affect long-term prosperity by locking in cuts in funding for public schools, community colleges, universities, health care and public safety—the very services that fuel economic growth.

Despite the claims of several legislative leaders advocating for a tax cut, there is no evidence that income tax cuts generate good jobs or economic growth. In fact, a study of 65 years of data by the Congressional Research Service found that top income tax rates have had no discernible impact on economic growth, and states that cut taxes the most during the 1990s and 2000s saw their economies fall behind in job creation, as well as production and income growth. (more…)

War on Poverty: Part 2

From the League’s First Tuesday newsletter
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Today marks the 50th anniversary of President Lyndon Baines Johnson’s now-famous State of the Union address that launched the War on Poverty:

“Unfortunately, many Americans live on the outskirts of hope — some because of their poverty, and some because of their color, and all too many because of both. Our task is to help replace their despair with opportunity.

While some pundits will undoubtedly seize the anniversary as an opportunity to wrongly declare the War on Poverty a failure, we should instead recommit to LBJ’s vision, as there is plenty of evidence that it worked. And what an incredible return on investment! (more…)

The kids are not all right

Whatever economic recovery has occurred in Michigan, it has not reached children and their families. Poverty continues to affect one of every four of the state’s youngsters. Over half a million of the children in Michigan lived in families with income below the federal poverty level ($18,000 for a single parent family of 3 and $22,000 for a family of four), according to this year’s annual Kids Count in Michigan overview of child well-being.

Economic security weakened in almost every county between 2005 and 2011, and the more affluent counties experienced the steepest increases: Oakland, Ottawa and Macomb counties saw their child poverty rates almost double over the trend period. (more…)

Unemployment drama redux

It is December again. Along with the annual holiday season comes what is beginning to feel like an annual drama: Congress approaching year’s end without reauthorizing long-term Unemployment Insurance benefits.

If Congress does not reauthorize Emergency Unemployment Compensation, up to 189,700 Michigan workers could lose benefits as they continue to look for jobs: 43,800 immediately, an additional 86,500 if their unemployment goes beyond 20 weeks before June 2014, and 59,400 more if they go beyond 20 weeks between July and December 2014. (more…)

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