Though researchers disagree on the effects of “right to work” legislation on the number of jobs, what is quite clear is that such laws suppress wages. Now that legislative leaders have suddenly put a so-called “right to work” (RTW) bill on a very fast track, I hope legislators will take a careful look at a couple of recent studies that examine the economic effects and warn against following the path of the states that have approved RTW laws.
A recent report by Dr. Abdur Chowdhury, who teaches economics at Marquette, reached the following conclusion about the effects on Wisconsin income and state taxes:
“The potential net loss in direct income to Wisconsin workers and their families due to a RTW legislation is between $3.89 and $4.82 billion annually. Using a conservative estimate of an impact multiplier of 1.5, the total direct and induced loss of a RTW legislation is estimated between $5.84 and $7.23 billion annually. Read more
State and local policymakers in many parts of the country are coming to the conclusion that too many workers get paid too little, and they are pushing for higher wage standards for workers. Yet in Wisconsin, lawmakers are moving in the opposite direction.
A Gallup poll conducted last week found strong public support for boosting the minimum wage (now $7.25/hr.) to $9.00 per hour. That change was supported by 76% of Americans, with only 22% opposed. Here are a few of the other highlights from the national survey of 1,040 adults:
- The support was solid across the political spectrum – with the backing of 58% of Republicans, 76% of Independents, and 91 % of Democrats.
- Support wasn’t quite as strong for indexing the minimum wage for inflation (after raising it to $9), yet that was endorsed by 68% of adults and opposed by 29%.
- Public support for an increase to $9.00 was up 5 percentage points since early March, when 71% were in favor and 27% against the proposal.
The national poll was conducted by Gallup last week at about the same time that 61% of New Jersey voters supported an amendment to that state’s constitution to raise the minimum wage $1 to $8.25 and index it for inflation (even as they reelected Governor Christie, who had opposed that measure). Read more
A new resource posted online today helps illustrate Wisconsin’s stagnant earnings for workers in general and a decline for lower wage workers. Governing.com posted an interactive database showing state-by-state figures for average and median real wages for each year from 2002 through 2012.
The user-friendly database graphically displays the trend lines in each state, including not only the wages for people at the 50th percentile (i.e., the median wages), but also the trends for people in the middle of the top half (the 75th percentile) and for the middle of the bottom half of earners (the 25th percentile). All of the figures are converted to 2012 dollars to adjust for inflation.
The national data show that mean wages have essentially been unchanged (+0.1%) over the last 5 years (2007 to 2012), when they are adjusted for inflation. Because much of the wage growth has been at the upper end, the trends are worse when one examines median wages, rather than the mean. Read more
A minimum wage bill, SB 4, was introduced in the Wisconsin Senate on January 31 by Senator Wirch and Rep. Mason. A total of 34 legislators have signed onto the bill. Unfortunately, none of the cosponsors are Republicans.
The minimum wage in Wisconsin has been $7.25 per hour for most workers since July 2009. Senate Bill 4 would increase it to $7.60 (except for minors and currently exempt categories of workers), and beginning in September 2014 would require the Dept. of Workforce Development to make annual adjustments for inflation. It would also allow local governments in Wisconsin to set higher minimum wages.
The minimum wage has already increased in about a dozen states this year, including 10 states where it rises annually with inflation. As an article in the USA Today reported, a total of 23 states have either increased it already this year or are considering bills or ballot measures to increases their minimum wage. Read more
A number of states have automatic minimum wage increases, thanks to formulas that automatically adjust it for inflation.
However, Wisconsin is not one of the 12 states where the minimum wage is increasing this year (automatically in 10 of those states), nor is it one of the 19 states that exceed the federal minimum. Our floor on wages remains right where it has been ($7.25 per hour) since the last federal increase took effect in July 2009.
New Data Show Many Wisconsinites Haven’t Benefited Yet from the Slow Economic Recovery
Two years into the nation’s slow recovery from the Great Recession, Wisconsin’s working families are finally beginning to experience some signs of an improving economy. But the new Census Bureau figures released today (from the American Community Survey) reveal that the gradual economic gains have not been evenly distributed and have yet to benefit many of Wisconsin’s most vulnerable households. For example:
- Median household income was $50,395 last year, almost 8% below the 2007 level ($54,737).
- Median income for Black households in the state was just $24,399 in 2011, less than half the $52,444 earned by White households.
- Wisconsin’s child poverty rate was 18.2% in 2011, which represents an improvement from 19.1% in 2010, yet that difference was not statistically significant, and the rate remains far above the 13.4% level in 2008.
- The Black child poverty rate (49% in 2011) was nearly four times the rate for White children in Wisconsin.
DWD Reports 6.7 Percent Wage Growth, Compared to First Quarter of 2011
There was a bit of good economic news in our state Friday. The Department of Workforce Development (DWD) issued a press release noting that, “Wisconsin wage earners received record 1st quarter wages of $27.6 billion, up 6.7 percent or $1.75 billion from the first quarter in 2011.” The new figures come from the state’s very comprehensive Unemployment Insurance system database.
I think the recent Wisconsin wage growth is cause for a little celebration, but before you pop the cork on the good champagne I’d urge you to consider a couple of factors. First, keep in mind that Wisconsin’s job and wage numbers have been so depressed for the past few years that a bit of progress in regaining lost ground (compared to the U.S. average) is a big jump from where we’ve been. That seems to help explain the new wage numbers. Read more
Yesterday we took a look at how income inequality in the United States has grown over the last 30 years, and how the federal government is doing less about it. A new Census Bureau report released this week sheds light on whether trends in Wisconsin have followed a similar path.
Wisconsin is among the states with the least income inequality, although that inequality is growing. For the period 2005-2009, the Census Bureau ranked Wisconsin 46th in household income inequality as measured by the Gini index, a measure of the degree to which income or wealth is dispersed. That means that only four states (Wyoming, New Hampshire, Alaska, and Utah) had less income inequality. The states with the most income inequality were New York, Connecticut, Louisiana, and Mississippi.
In Wisconsin, the top tenth of households earned just under nine times as much as the bottom tenth, while in the U.S. as a whole, the top group earned more than 11 times the households in the bottom group. Read more
The top 1% more than doubled their share of the nation’s income between 1979 and 2007, according to new figures released by the Congressional Budget Office. Several factors in both the private and public sector are driving the income inequality, including rapidly increasing CEO salaries, the growth in the number of high-earners in the financial services sector, changes in the way income is taxed, and changes in the makeup of beneficiaries of government programs.
Thirty years ago, income inequality in the U.S. was much less dramatic. In 1979, the top 1 percent of the population earned just under eight percent of after-tax household income, compared to 17 percent in 2007. Here’s a breakdown of income growth between 1979 and 2007:
- For the top 1 percent, after-tax household income grew by 275 percent in inflation-adjusted dollars
- For the remainder of the top 20 percent, income grew by 65 percent.
- For the individuals in the 20th through the 80th percentile, income grew by 40 percent
- For the bottom 20 percent, income grew by only 18 percent.