Raise the Floor: Wages and Policies That Work for All of Us (review)

How is it possible that in the wealthiest nation in the world, millions of Americans live in poverty? How can it be that millions more people, working and living above the official poverty line, still do not earn enough to cover their basic needs? Raise the Floor is an addition to a recent collection of books revealing the dark underside of the U.S. labor market, while proposing policies that could improve the lives of workers as well as the overall functioning of the economy.

Sklar, Mykyta and Wefald begin with an examination of poverty measures, arguing (along with many others, including the National Research Council of the National Academy of Sciences) for an alternative way to measure the true cost of living for workers and their families. They go on to advocate for a "national minimum needs budget" that would establish the basic bottom-line annual budgets for different family types. The authors assert that "[p]eople should not have to chose between eating or heating, health care or child care." Instead, wages and social services should be set so as to assure that all people are able to meet their basic needs.

Why aren't current wage levels enough? Raise the Floor describes the history of the national minimum wage, comparing trends in its real value to trends in productivity, profits, and CEO pay. While productivity grew 74.2% between 1968 and 2000, the real value of the minimum wage fell 35%. Average hourly earnings for all workers also fell, by about 3%. Workers produced more goods, but were not rewarded with higher wages. So where did all the extra money go? Sklar, Mykyta and Wefald argue that much of that money went into higher profits and greater salaries for managers. In the same period that the real value of the minimum wage was dropping, profits rose by 64%. The authors don't provide data on CEO pay before 1980, but they do show that from 1980 to 2000 alone, the average compensation for CEOs at major corporations increased over 900%.

One of the authors' main arguments is that the minimum wage needs to be raised to $8 per hour, back to the level it would have been had Congress raised it regularly since 1968. They show that not only is there great public support for raising the minimum wage, but to do so would be good for business and the economy. The authors review the evidence from minimum wage and living wage research asserting that a higher minimum would not cause unemployment, and could instead provide benefits for employers such as reduced absenteeism, lower turnover, and better morale. Furthermore, workers would have greater disposable income to spend in their community.

An $8 per hour minimum wage, indexed to inflation, is only one part of the solution advocated by the authors. They write, "government must do more to assure that everyone can meet their basic needs, whatever their wage." This is especially true given that low-wage jobs are held disproportionately by women. Additional policies include universal health care, paid family and medical leave, improved child and dependent tax credits, universal pre-kindergarten, a national affordable housing trust fund, stronger labor laws, and pay equity.

Raise the Floor is filled with useful statistics about the low-wage workforce and those who do not earn enough to cover basic needs. The authors do an admirable job of compiling evidence to support their claims that higher wages have great benefits. However, they are limited in part by the paucity of data. While economists theorize the impact of higher wages, relatively little empirical work has been done measuring the actual impact of higher wages on workers, firms, and communities. Also, as is common with similar books, the authors provide lots of policy suggestions but...