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Raising the minimum wage

Updated: Friday, February 21, 2014
Raising the minimum wage story image
KALAMAZOO, Mich. (NEWSCHANNEL 3) - The White House effort to raise the minimum wage nearly three dollars-an-hour over the next two years has drawn huge criticism from the right.

But our Tom Van Howe, who tonight is back in his corner, says once you get past the rhetoric, a wage hike for some of our poorest people is an idea that’s long overdue.

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Are there problems with this new wage proposal? Sure. There are with any new law.

But getting straight to the heart of the matter: getting by--assuming you’re working full-time--on less than $15,000 a year is no picnic. This proposed wage hike would put a substantial amount of cash--something like $100 a week--in the pockets of more than 16 million workers.

It would move roughly a million people out of poverty.

And guess what those workers will do with that extra money? They’ll spend it. They’ll pump billions of new dollars back in to local markets.

One writer for a national magazine says those billions don’t mean that much in our $17-trillion dollar economy; that it’s hardly worth the effort.

He’s missing the point.

It would mean working people, young and old, would get a 30 percent wage increase. These are working people. These are not people on the dole. We’re not talking about handouts or welfare fraud.

And while twenty grand a year is hardly the American dream, it’s a step toward dignity...Toward a tiny bit of breathing room.

Republicans are citing a Congressional Budget Office report that says a wage increase will cost us a million jobs.

Well, that’s not quite what it said. The CBO report  was vague  and said the hike could cause the loss of somewhere between none and a million jobs. Many economists are leaning toward the White House  view that job loss will be at the low end of the spectrum.

Some job loss is probably inevitable. It’ll push some employers to cut back, others to accelerate automation. But that’ll happen eventually anyway.

And before you absorb all the anti-wage hike rhetoric, take a closer look at the growing disparity between the people we’re talking about here and the incredibly rich.

  • Even at $10.10 an hour, the U.S. minimum wage will be lower after adjustments for inflation that it was in 1975.

  • The 85 richest people on earth have the same amount of wealth as the lower half of the world’s population.

  • Those 85 people are just a handful of the richest one percent who have 65 times the total wealth of the bottom half of the population. Sixty-five times!

  • American corporations have more than $2 trillion tucked away in off-shore and foreign banks to avoid the reach of the IRS. Actually, its probably more than that. We don’t know for sure.

  • In this country, since the start of the recovery four years ago, 95 percent of the gains have gone to the top 1 percent. No trickle down. They got two great tax cuts in the last decade, but nothing trickled down.

  • CEO's are still taking home 300 times the earnings of the average worker.

So can someone please give me a convincing argument that those who struggle most don’t  deserve $2.85 an hour more than they’re getting now?

In this corner...I’m Tom Van Howe.

Business News

Last Update on October 31, 2014 17:47 GMT

CONSUMER SENTIMENT

WASHINGTON (AP) -- U.S. consumers expect better economic growth and rising incomes in the coming months, pushing a measure of confidence to a seven-year high in October.

The University of Michigan says that its index of consumer sentiment rose to 86.9 from 84.6 in September. That's the highest since July 2007, five months before the Great Recession began. Still, the index regularly topped 90 before the downturn.

Richard Curtin, the survey's chief economist, says that almost six in ten of the respondents said the economy has improved recently, the highest proportion in more than 10 years.

The measure is the second this week to show consumer confidence has reached the highest level since the recession. Greater confidence and more hiring could lead to faster spending and healthier economic growth.

CONSUMER SPENDING

WASHINGTON (AP) -- U.S. consumer spending fell in September, the first decline since January, as shoppers took a breather after a big spending spree in August. Income growth posted the slowest gain this year.

The Commerce Department says consumer spending dropped 0.2 percent in September. Income edged up 0.2 percent in September, the smallest monthly gain since a flat reading last December.

The spending decline followed a big 0.5 percent increase in August. In September demand fell for durable goods such as autos and for nondurable goods, a drop that partially reflected falling prices for gasoline.

Spending is closely watched because it accounts for 70 percent of economic activity. Economists believe September will be a temporary pause as continued hiring gains pushing up spending and the overall economy in coming months.

GASOLINE PRICES

NEW YORK (AP) -- The average price of gasoline in the U.S. hit $3 a gallon Friday, and should soon drop below the benchmark for the first time since December 2010.

The price at the pump fell 33 cents in October, thanks mainly to plunging oil prices, according to AAA.

Many exuberant drivers have taken to social media to post pictures of gas station signs with prices of $2.99 or lower. Drivers in South Carolina and Tennessee are paying the lowest prices, with an average of $2.75 a gallon.

Drivers in New York are paying the most in the continental U.S., at an average of $3.37. That's still 22 cents cheaper than a year ago.

Gasoline is cheaper than milk again. In September the national average price of milk was $3.73 per gallon.

EARNS-BIG OIL

NEW YORK (AP) -- Falling oil prices hardly seem to be bothering the two biggest U.S. oil companies, but things could get tougher in the coming months.

Exxon and Chevron leaned on strong performances from their refining operations to increase profits in the third quarter despite plummeting global oil prices.

The global price of oil fell 18 percent from the beginning of the quarter to the end, and it cost both companies. Revenue slipped at Exxon by 4 percent and at Chevron by 8 percent.

But low oil and natural gas prices make for low raw material costs -- and higher profit -- for refining and chemical operations, which turn oil and gas into fuels and chemicals. Profit at Exxon's refining and chemicals operations rose 38 percent compared with a year earlier, and Chevron's profit from its so-called downstream operations more than tripled.

Those results helped Exxon's overall earning rise 3 percent in the quarter to $8.07 billion. Chevron's earnings rose 13 percent to $5.59 billion.

NISSAN-AIR BAG RECALL

DETROIT (AP) -- Nissan says it's recalling more than 1,800 Infiniti SUVs in the U.S. for an air bag problem that could send shrapnel into the passenger compartment.

The recall covers the QX56 SUVs from 2013 and the QX80s from 2014. The company says inflators made by Takata Corp. were built with an incorrect outer baffle part. That can cause pressure to build up, and the inflators can rupture if driver's side air bags are deployed.

Nissan has no reports of injuries from the problem. It was discovered after General Motors recalled 33,000 Cruze compact cars for the same problem in June. The Infiniti recall is part of a larger global recall of 260,000 Nissans announced last week.

Takata says the recall is separate from another one affecting 8 million vehicles in the U.S.

EUROPE-ECONOMY

FRANKFURT, Germany (AP) -- Inflation has crept higher in the 18 countries that use the euro but the rise to 0.4 percent in the year to October is unlikely to offer much relief to the European Central Bank as it tries to boost a weak economy.

The official figure released Friday was up from 0.3 percent the month before.

The European Central Bank is under pressure to give the eurozone another dose of stimulus measures in coming months because inflation is so low and growth so weak. There are fears the eurozone could even fall into outright deflation, a crippling downward price spiral.

Core inflation, a key measure because it excludes volatile food and energy prices, fell to 0.7 percent from 0.8 percent.

The bank's goal is to keep inflation just below 2 percent.

BRITAIN-RBS

LONDON (AP) -- Royal Bank of Scotland, which is majority-owned by the U.K. government, has set aside 400 million pounds ($639 million) to cover potential fines arising from international investigations into alleged manipulation of foreign currency trading.

The total represents over half the 780 million pounds the bank earmarked for "conduct and litigation costs" in third-quarter earnings released Friday.

The results show the bank, which was bailed out by the government during the 2008 financial crisis, swung back to profit during the July-September period. Its net income of 896 million pounds follows an 828 million-pound loss last year.

CEO Ross McEwan says the bank knows it has "a long list of conduct and litigation issues to deal with and much, much more to do to restore our customers' trust in us."

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