This article was originally published on the front page of the Perspectives section in the Denver Post and on the Denver Post’s website
Brilena McGlochlin sits on the earth-toned couch at Harvest of Hope food pantry in Boulder, waiting for her number to be called. She had been fired the previous morning from her minimum-wage job at Walgreens, just nine months after receiving Walgreens’ employee of the month award.
After getting fired, McGlochlin drove her 1995 Buick straight to Smoker Friendly, a tobacco retail store, to apply for another job. As a single mom with little savings and two young girls to support, she couldn’t afford to wait.
“I filled out applications in my car,” McGlochlin said. “The early bird gets the worm, right?”
Now, on a sunny but cool Thursday morning in April, McGlochlin, 26, needs to pick up some essentials for herself and her two young daughters before she continues her quest for a new job, possibly one that pays more than the minimum wage.
She said she’s been applying to regular minimum-wage jobs, such as at UPS, but she really wants to work as a bookkeeper, a job for which she trained at Delta-Montrose Technical College.
“I’m just gonna knock on some doors until someone will give me a step up.”
Despite inaction at the federal level, city councils and state legislatures across the country are debating giving people like McGlochlin a step up.
In fact, Seattle earlier this month raised the city’s minimum wage to $15 per hour, soon after the U.S. Senate blocked legislation that would have raised the national minimum to $10.10 from its current rate of $7.25. Colorado’s minimum wage, which is indexed to inflation, increased slightly to $8 per hour in January.
With so much at stake for employers, workers and the state, economists are increasingly entering the fray. In January, the Economic Policy Institute, a liberal think tank, released a letter to key U.S. policymakers with more than 600 signatures from economists in support of the Obama administration’s proposal to raise the federal minimum wage to $10.10 by 2016. In April, a letter with more than 500 signatures from economists emerged, urging lawmakers to consider the economic consequences of raising the minimum wage.
Both letters included signatories from Colorado universities. And both sides in this debate cite empirical research and boast their fair share of Nobel laureates. But who’s right?
For workers such as McGlochlin, struggling to raise a family, it doesn’t matter who’s right. They just need more money.
$900 per month
McGlochlin budgets about $900 a month to support herself and her children.
Her largest expense is food, on which she spends about $436 per month, $286 of that coming from the federal government’s food stamp program. The other $150 comes out of her pocket.
She also makes weekly trips to Harvest of Hope to pick up a few key items for herself and her two daughters, 7 and 9.
“Two-hundred eighty-six dollars in food stamps doesn’t go very far for three people,” McGlochlin said. “I don’t know how they expect me to feed them on that.”
McGlochlin lives in a three-bedroom trailer in Boulder with her parents, her two brothers, 18 and 26, and her daughters. She pays her mother $300 rent for a single bedroom. Because McGlochlin needs a car to get to and from work — and to look for work when she needs more — she spends $25 per month on car insurance.
She receives health care benefits from Medicaid.
McGlochlin said the minimum wage should be raised, but she doesn’t think that adding more benefits will help lower-income Americans. “If you throw more benefits into the system then you’re just going to see more bloodsuckers,” McGlochlin said.
Sanjai Bhagat, an economics professor at the University of Colorado at Boulder, signed the letter against raising the minimum wage. He believes that doing so will reduce employment, with low wage-earners bearing the brunt of the job cuts. “Lots of individuals are going to be unemployed because of this,” he said. “And that’s tragic.”
Jeffrey Zax, Bhagat’s colleague in the CU-Boulder economics department, agrees that raising the minimum wage is bad economics. “Raising the minimum wage is the kind of cosmetic improvement that satisfies many of us who aren’t prepared to think very deeply about what it is we’re doing,” he said.
One of the principal arguments economists make against raising the minimum wage is that employers will react to the higher cost of labor by eliminating jobs or cutting back on workers’ hours. Bhagat believes that increasing the minimum wage gives employers greater incentive to find ways to reduce labor costs, such as by investing in machinery that can do all or part of what a worker was being paid to do.
“When you raise the price of some input, companies use less of it,” Bhagat said.
Daniele Tavani, an economics professor at Colorado State University in Fort Collins, signed the letter in support of raising the minimum wage. “A moderate increase of the kind proposed in the letter will have little, if any, aggregate employment effect in the country,” he said. “An increase in the minimum wage would be of fundamental importance in lifting millions of households from poverty.”
“That didn’t happen”
Kayla, 25, and Aaron Vanderploeg, 28, still can’t afford to live on their own while getting paid $10 per hour.
Kayla got her bachelor’s degree in business, and her husband, Aaron, got his in youth ministry at Barclay College in Kansas. “We thought we would both just get jobs right away and be well off,” Kayla said. “That didn’t happen.”
Kayla and Aaron graduated with $100,000 in debt between them. Neither has been able to find jobs using their degrees. They’re not surprised that Aaron can’t find a job in youth ministry. But Kayla was surprised she couldn’t find a job.
Her biggest hurdle: getting experience to qualify for a job.
She worked a minimum-wage job at Michaels during the Christmas season rush. Eventually, she was promoted to manager, and made $10.50 an hour. She had to quit that job because she had a baby, and day care would have cost her entire paycheck.
Now, she works 18 hours a week at the Book Nook — an independently owned used book store in Louisville — for $10 an hour. Her boss lets her bring her baby into work. Her weekly salary covers her family’s expenses. Aaron makes more than minimum wage as an electrician’s apprentice, but his entire paycheck goes to paying off student loans.
Right now, they have to live with her parents in Thornton just to make ends meet. They don’t receive government assistance.
Kayla is torn on whether or not the minimum wage should be raised. On the one hand, she thinks of how much it would help her old co-workers at Michaels, most of whom Kayla said worked a second job after their 8 a.m. to 5 p.m. shift.
“They wouldn’t have to work two jobs anymore,” she said.
Some proponents for raising the minimum wage agree that, in theory, if you raise the cost of labor, you’ll get less of it. However, CSU’s Tavani and others believe that opponents of raising the minimum wage aren’t seeing the whole picture.
Elissa Braunstein, a colleague of Tavani’s in the economics department at CSU, believes that the current weak state of the economy needs to be taken into consideration. “Right now, we are in a situation of deficient aggregate demand, stagnant incomes for most, and insufficient incomes for the poor,” she said. “In that context, increasing the minimum wage will have more positive than negative effects.”
According to Tavani, those positive effects stem from the fact that low-income workers spend most of their income, which is good for businesses and economic growth. “A minimum wage increase will boost consumption for the households affected, this way being potentially growth-enhancing without generating unemployment,” he said.
The logic goes that as low-wage workers’ incomes rise and they spend that income, businesses’ sales rise as well, which more than offsets the increased cost of labor. “The most recent evidence, in my opinion, points toward beneficial effects of an increase in the minimum wage,” Tavani said.
“I was livid”
Brilena McGlochlin’s LinkedIn profile boasts of her bookkeeping and computer skills, and reminds potential employers of her training and education at Delta-Montrose. But the trail ends in 2009. The jobs at Subway, Burger King and Walgreens are apparently not worth mentioning on the online career site.
Yet those are the jobs she’s been working. And keeping a minimum-wage job isn’t easy.
McGlochlin has tried to improve her skill set in an attempt to make her more qualified for higher-paying jobs. Her ultimate goal is a bachelor’s degree. “I would really like to get my bachelor’s degree and get something I deserve,” she said, “not minimum wage.”
While she worked on her associate degree in 2007, McGlochlin’s already strained marriage reached a breaking point when she came home and found her husband and his friend drunkenly shooting BB pellets in their studio apartment, she said, with their 2-year-old daughter in the room.
“I was livid,” McGlochlin said.
McGlochlin pulled the gun from her husband’s hands and “kind of hit him” with it. She said her husband then threw her through a window. She was charged with a felony: domestic abuse with a weapon.
McGlochlin and her husband have since split, and she has a restraining order against him. She said he still owes her $7,000 in child support. Now, McGlochlin can’t get a job anywhere that does not require a background check, which is pretty much any job that would use her degree. She also can’t rent anywhere that requires a background check — if she could even afford it.
Since 2011, the University of Chicago Booth School of Business has been polling economists from top U.S. universities on the economic effects of everything from immigration to paying college athletes.
In February 2013, they asked their panel of economic experts about the effects of raising the federal minimum wage to $9 per hour. On the question of whether it would make it harder for low-skilled workers to find employment, the panel was split, with 34 percent agreeing and 32 percent disagreeing. Especially telling was that 24 percent of respondents chose “uncertain” and none chose “strongly agree” or “strongly disagree.”
In February 2014, the nonpartisan Congressional Budget Office released a report on the administration’s minimum wage proposal that did little to settle the debate. Republicans highlighted the report’s prediction that raising the federal minimum wage to $10.10 would reduce total employment by 500,000 workers by the second half of 2016. Democrats, on the other hand, pointed out that the report predicted 16.5 million low-wage workers would get a raise and 900,000 families would be lifted above the poverty line under the proposal.
But both statements from the CBO came with caveats: For example, 500,000 workers is the midpoint in a possible range from 0 to 1 million job losses.
While the Booth School’s polling and the CBO report seem to highlight the complexity of economics, there does seem to be some consensus emerging on the subject. When the Booth School asked its panel of economic experts if the benefits of raising the minimum wage (greater income for low-wage workers who can find employment) outweigh the potential costs (job losses for some low-wage workers), 47 percent of respondents agreed, with only 12 percent disagreeing.
But uncertainties remain. “We are bound with the available evidence, which is imperfect and noisy,” said CSU’s Tavani. “Economics is not, and never will be, a hard science.”
“More honor than that”
There’s nothing easy about living on minimum-wage work, and that’s where government benefit programs often fill the gaps for so many people.
For her part, McGlochlin wants to wean herself from government benefits as soon as she can. Though she’s twice needed help from Temporary Assistance for Needy Families (the primary “welfare” program with which Americans are most familiar), she isn’t getting TANF money now.
“That’s not enough for me. That’s not enough for my girls. I want more for them,” she said. “Living off assistance, it’s part of the problem with our system. What am I showing them? If I’m stealing from the system, what are they gonna turn out to be? I want them to have more honor than that.”
“My girls see me struggling, but they see me fighting a lot, too. I want them to grow up thinking they can accomplish anything they want.”
McGlochlin understands and takes responsibility for her dilemma, and she understands she needs help, both from the government and places such as Harvest of Hope. “I’m only in the position I’m in because life choices, life decisions, life mishaps have put me here,” she said. “But that doesn’t mean that I wanna be here or that I wanna stay here.”
Paul McDivitt is a graduate student at the CU-Boulder. Jake Kincaid just graduated. For more of CU News Corps’ work, go to http://cunewscorps.com.
Colorado economists who signed the letter opposing raising the minimum wage:
University of Colorado at Boulder: Barry Poulson and Sanjai Bhagat
University of Denver: Michael Williams
Colorado economists who signed the letter supporting raising the minimum wage:
Colorado State University-Fort Collins: Alexandra Bernasek, Elissa Braunstein, Anita Pena, Steven Shulman, J. Ron Stanfield, Daniele Tavani
University of Denver: Yavuz Yasar, P. Sai-wing Ho, Haider Khan, Tracy Mott, Chiara Piovani
University of Colorado at Colorado Springs: Daphne Greenwood
Western State Colorado University: David Plante