E-mail a friendWilliam Spriggs
airdate January 25, 2007
Dr. William Spriggs is chair of Howard University's Economics Department and a senior fellow with the Economic Policy Institute. He's done research on labor relations, the minimum wage and international labor standards. During the Clinton Administration, he worked in various agencies, including Commerce and the SBA. Before going to Washington, Spriggs taught at Norfolk State University and North Carolina A&T State (Greensboro). He's a former president of the National Economics Association.
William Spriggs
Tavis: William Spriggs is the chairman of the department of economics at Howard University and a former senior fellow at the Economic Policy Institute. He also served in the Department of Commerce under President Bill Clinton. He joins us tonight from Washington. Professor Spriggs, nice to have you on the program, sir.
Dr. William E. Spriggs: Thank you for having me.
Tavis: It’s my pleasure. So we go from $5.15 an hour to $7.25 an hour. What do you make of it?
Spriggs: Think it’s very significant. We haven’t left the minimum wage this low for this long. This is breaking a record for the length of time we have not increased the minimum wage. And in a way, it’s sort of obscene, because in the last nine years, while we haven’t changed the minimum wage, Congress has acted very often to lower the estate tax for a few thousand Americans who would have to pay the estate tax, while millions of Americans will benefit from this minimum wage increase.
Tavis: Don't wanna be naÔve in asking this question, but why so long, historically the longest period, as you just mentioned, between now and the last time we had an increase? Why so long?
Spriggs: It’s become a very partisan issue. Back in the 1930s and ‘40s, when we instituted the minimum wage, it was pretty much approved by both parties. And then for the most part, each president who’s been elected has raised the minimum wage. When Republicans are president, then Republicans in Congress have voted to raise the minimum wage along with Democrats.
And when Democrats have been president, Republicans have refused to give the victory to the Democratic president. But under Ronald Reagan, he became the first elected president to not increase the minimum wage. It has become even more of a partisan issue. And even the most recent vote by the House shows that.
Over half the states in the United States now have state minimum wages which are above the current federal minimum wage. So, in a sense, this should have been a free vote for those members. But you still see that there were Republican members of Congress, even in those states, where their state minimum wage is higher than the current federal minimum wage, voted against this increase.
Tavis: What does it mean that some 28 states, to your point now, 17 states raised it just last year alone. But what does it mean that 28 states in the union get what apparently members in Congress do not get, which is that $5.15 an hour doesn’t work, particularly when you consider, to your point now, that these folk in Washington were sent there by people back in these states across the country? So why do states get it where the federal government apparently has not gotten it all this time?
Spriggs: It’s the most popular thing when you poll people, because people, of course, get it. They believe that working ought to pay, and that people ought not be poor and work. That seems a very big oxymoron in the richest country on the planet. So, it does seem difficult to understand why the federal level, except that the federal level, it’s possible to influence policies in a way that isn't possible at the state level, where state legislators have to heed very popular referendums that people close to them feel.
Tavis: So, a long time coming, but we do now have an increase from $5.15 to $7.25. And yet, as I read these details, that’s being phased in over a two year period. So tell me why it takes two years to phase in a $2.00 increase.
Spriggs: Well, percentage wise, that’s a pretty substantial increase, and firms do need time to adjust to higher wage levels. It’s not so simple for a firm to simply just jump up to that wage level. For instance, if you're a current worker who’s getting paid $7.50 an hour, then a new employee comes in and gets $7.25 an hour, you're gonna look at your boss a little funny that someone who just showed up is getting paid almost what you're getting paid, and you’ve been there for two or three years. So firms need some time to adjust their wage levels to the new wage.
Tavis: All right. The other thing that concerns me about this is the fact that this is not just a clean-cut, without attachments increase from $5.15 to $7.25. The Republicans got their way with some stuff they got attached to this. Tell me about it.
Spriggs: Well, the House, fortunately, did pass a clean piece of legislation. It’s the first time in a long time we’ve seen that happen. But in the Senate, the Republicans got to put in some tax cuts. It’s really unfortunate, because when you look at it, the current level of the minimum wage is so far away from the average wage of other Americans; the average wage is around $17 an hour.
So even if you started at $7.00 an hour, which is way above the current minimum, but close to where it will be, it’s almost impossible to see how someone could get raises over time to get them to the average wage of $17 an hour. And so, it means that firms that are paying a very low wage see very high turnover rates.
They have to constantly recruit, train, retrain, re-recruit workers as people leave their employment to try and get jobs that pay a decent wage. So actually, the total cost to firms of having higher wages, or at least wages that are closer to what’s typical in the economy, the total cost is actually lower than what you would guess by just looking at the increase in the wage bill.
Tavis: So why fight it, then?
Spriggs: Well, because as an individual firm, if you say raise your wages, then as an individual firm, you can’t. It’s very hard for firms to think globally, or to think about what does this mean economy-wide. So the knee-jerk reaction of an individual company is, “I can’t afford to raise my wages.” But of course, all of their competitors have to raise their wages at the same rate. So in that global sense, it doesn’t put them at a competitive disadvantage.
Tavis: So, when we finally get to, two years from now, your point about the increase being substantial notwithstanding, in two years, when we finally do, Professor Spriggs, get to $7.25 an hour, (laugh) why should I believe that that will be a respectable minimum wage in two years from now?
Spriggs: Oh, we still have some ways to go, because we’ve let the minimum wage fall to about a third of the average wage. So when we get it back up to the $7.00 area, we still will have to have other increases to restore low wage workers to the average wage, so that the floor for all workers gets more respectable. And it’s a shame we did this Personal Responsibility Act, back when we talked about Welfare reform, and we put the onus on poor women, saying you had to get a job.
And we haven’t lived up to our societal responsibility, which is that work has to pay. And it has to be the case that if you work, you won’t be poor. So, we still have a ways to go as a society.
Tavis: Finally, to that point, how many people in America are directly impacted by this increase?
Spriggs: There’ll be well over five million workers who are gonna benefit, because they are gonna be making, currently making less than $7.00 an hour, $7.25 an hour. And so they will all see a boost. And then there will be other workers who are paid based on the minimum wage. So there are a lot of workers who get $6.00 or $7.00 an hour today only because the minimum wage is $5.15. When the minimum wage goes up, they will also see increases.
Tavis: Professor William E. Spriggs, chair of the economics department at Howard University in the nation’s capitol. Professor Spriggs, thanks for your insight. Nice to have you on, sir.
Spriggs: Thank you for having me.
Tavis: My pleasure.
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