WASHINGTON, D.C. Oct. 25, 2011 - Today the National Employment Law Project Action Fund blasted GOP Presidential candidate Herman Cain's new economic development plan, which proposes that communities roll back minimum wage laws in order to promote economic growth. Under the candidate's misguided plan, "Cain's Vision for Opportunity Zones: Renewing Cities Across the USA," localities would submit proposals to the federal government to roll back regulations and laws such as the minimum wage. The policy document asserts, without citation, that "minimum wage laws prevent many unskilled and inexperienced workers (i.e. teens) from getting their first job and prices them out of the market."
"Under the guise of ‘job creation,' corporate interests are exploiting the economic crisis to promote an anti-worker agenda that would only cause America's families even greater pain," said Christine Owens, executive director of the National Employment Law Project Action Fund. "The truth is that a strong minimum wage is key to economic recovery and should be raised, not lowered or eliminated. In addition to helping working families make ends meet, raising wages for the lowest-paid workers boosts consumer spending, which is the engine of our economy," said Owens.
As detailed in a NELP briefing paper, raising wages for the nation's lowest-paid workers puts money into the hands of people who spend their incomes at the highest rates, boosting demand for goods and services in the local economy. An Economic Policy Institute analysis of President Obama's 2008 campaign proposal to raise the minimum wage to $9.50 by 2011 found that it would generate more than $60 billion in new consumer spending.
Furthermore, a new NELP data brief shows that high teen unemployment is a result of the jobs crisis, not the minimum wage – directly refuting Cain's claims that the minimum wage keeps teens out of the labor market. Another recent study published in April 2011 in the journal Industrial Relations found that even during times of high unemployment, minimum wage increases did not lead to job loss among teens.
Cain's proposal follows a string of comments by Republican presidential candidates claiming that lowering or repealing the minimum wage would spur economic recovery, which is currently just $7.25 per hour, or $15,080 a year at the federal level. When asked at last month's debate at the Reagan Presidential Library if he supported eliminating minimum wage laws, Texas Congressman Ron Paul responded, "Absolutely. And it would help the poor, the people who need a job."
Minnesota Congresswoman Michele Bachmann made a similar comment in 2005 before a state legislative committee. "Literally, if we took away the minimum wage—if conceivably it was gone—we could potentially virtually wipe out unemployment completely because we would be able to offer jobs at whatever level," said Bachmann. In June, Bachmann said she would consider abolishing the minimum wage.
In addition to lowering the minimum wage, Cain argues that prevailing wage laws-- which require work contracted by the federal government to pay wages and benefits according to local industry standards—also impede economic recovery. Cain's proposal comes on the heels of new Census data revealing that median household income fell 7 percent in the last decade.
"We need to protect and strengthen minimum wage and prevailing wage laws in order to keep workers from falling further behind," said Owens.
As president of the National Restaurant Association, Cain lobbied aggressively against increasing the minimum wage from $4.25 to $5.15 in the mid 1990's.
The National Employment Law Project Action Fund, a project of The Advocacy Fund, is a non-profit organization under section 501(c)(4) of the Internal Revenue code.
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