Learning a lesson from Henry Ford

U.S. Sen. Angus King (I-Maine), Special to The County
10 years ago

Exactly 100 years ago, Henry Ford shocked the business world by doubling his workers’ pay. Predictions of the collapse of the business were heard and his competitors were furious. But Ford understood that the ultimate success of his business depended upon customers who could afford to buy his cars – and he wanted his workers to be among those customers. And so it is today – our economy needs customers, workers with enough take-home pay to buy the goods and services that make our country run. I think it’s time to take a lesson from old Henry Ford.
The minimum wage is absolutely essential in making sure that people can sustain a reasonable standard of living. Since it was created in 1938, the “real” value of the minimum wage – which is adjusted for inflation in today’s dollars – has ranged from $4.02 to $10.57. Today, it sits at $7.25 an hour, and hasn’t seen an increase since 2009. That means a full-time minimum wage worker will make around $15,000 in 2014, which is unacceptable. As the cost of living only continues to go up, it’s clearly time for Congress to raise the minimum wage.

Sen. Tom Harkin (D-Iowa), chairman of the Health, Education, Labor and Pensions (HELP) Committee, has introduced the Minimum Wage Fairness Act, which would raise the minimum wage to $10.10 over a period of three years, bringing it in line with inflation. The bill would also raise the minimum wage for tipped workers for the first time in over 20 years.
It’s important to point out how this bill would get to $10.10. Rather than immediately set the number above $10, the plan would make incremental increases over the course of three years. The wage would be raised to $8.20 after six months, $9.15 after one year, and finally hit $10.10 after two years. This gradual increase will make the change easier on employers while continuing to put more money in the pocket of the employees.
The Minimum Wage Fairness Act will also help workers who regularly receive tips (at least $30 per month) and can be paid a sub-minimum wage as a result. The bill would increase the tipped minimum wage – which has been frozen at $2.13 per hour since 1991 – by 95 cents every year until it reaches 70 percent of the regular minimum wage. This will help guarantee that all workers – including those dependent on tips – benefit from a much-needed increase.
A critical element of the minimum wage debate is the gender wage gap. The President’s Council of Economic Advisors says that an increased minimum wage would help narrow the wage gap between men and women. I believe in equal pay for equal work, and I support raising the minimum wage in part because it will help elevate compensation for female workers to a more equitable level.
I know there are many opinions on how to best approach this issue, and I stand ready to work with my colleagues on both sides of the aisle to find a path forward. Many states are already taking the lead on raising the minimum wage, and Congress has to do its part as well. We must set a reasonable floor at the federal level in order to avoid a race to the bottom. When I was governor, I vetoed increases in the state minimum wage, calling each time on Congress to meet its obligation to set a uniform, livable federal standard. That continues to be my position.
Raising the minimum wage will lift people out of poverty, increase economic security, empower disadvantaged workers, and help bridge the wage gap between men and women. We can do this in a responsible and careful way that doesn’t hurt employers. When the Minimum Wage Fairness Act comes to the Senate Floor for a vote, I am prepared to give it my full support.