It’s debatable whether President Obama’s proposed Minimum Wage increase would help the poor, but it may benefit organized labor.
Labor unions often peg their negotiated wages to the minimum wage. Increases in the minimum wage can therefore trigger new wage negotiations or immediate pay hikes for unionized employees, according to research provided by the Center for Union Facts, an anti-union group.
Collective bargaining agreements with the Union of Needletrades, Industrial and Textile Employees (UNITE) mandate that “[w]henever the federal legal minimum wage is increased, minimum wage [in the agreement] shall be increased so that each will be at least fifteen (15%) percent higher than such legal minimum wage.”
Several United Food and Commercial Workers (UFCW) Locals have an agreement with a California grocer requiring that, “in the event the State or Federal minimum wage increases during the term of this Agreement (2007-2011) to a rate greater than eight dollars ($8.00), each rate will be at least twenty cents ($0.20) above the minimum wage and each rate will be at least ten cents ($0.10) higher than the previous rate in the progression schedule.”
One SEIU Local’s agreement orders that “[t]he minimum hourly wage rates shall exceed any statutory applicable minimum wage rate by fifty cents.”
The Retail, Wholesale, & Chain Store Food Employees Union Local 338 have an agreement that says, “In the event of an increase in Federal or State minimum wage requirements, the employer agrees to meet and discuss those rates impacted by the new minimum wage.”
“This research shows that labor unions stand to gain from minimum wage increases, even though their members don’t make the minimum wage,” said Richard Berman, Executive Director of the Center for Union Facts. “Some union contracts set starting union wages as much as fifteen percent higher than the federal minimum wage.
Union groups and Democratic lawmakers applauded the president’s support for increasing the minimum wage, but feel it doesn’t go far enough.
“While we believe the President’s proposal is lower than what is needed, there is no question that last night he threw the door open for a robust discussion on the importance of raising the minimum wage,” Iowa Democratic Sen. Tom Harkin and California Democratic Rep. George Miller said in a statement.
The chief economist of the AFL-CIO William Spriggs concurred.
“If the minimum wage was restored to its value in 1968, then today it would stand at $10.58, but more importantly if we kept the minimum wage in relation to the average wage, it would be close to $12.00 an hour. We must index the minimum wage to average wages so that all workers are able to benefit from productivity increases,” he said in a statement.