EPI Answers Some Common Questions About The Federal Minimum Wage

This is from the Economic Policy Institute.

You can click here to see a more in-depth discussion of each question. 

Public Overwhelmingly Wants Minimum Wage Raised To $15 An Hour

The chart above reflects the results of the Economist / YouGov Poll -- done between October 31st and November 3rd of a nationwide sample of 1,656 adults (including 1,474 registered voters). The margin of error is 3.4 points for adults and 3.1 points for registered voters.
 

Raising The Minimum Wage Does NOT Cause Layoffs

 

It is a Republican mantra that raising the minimum wage would cause layoffs - and raising it up to a livable wage would cause massive layoffs. That is simply never been true.

California recently raised the minimum wage for fast food workers (traditionally among the lowest paid workers) to $20 an hour. Did it cause massive layoffs? No! It didn't cause layoffs at all. The number of fast food jobs actually increased!

How could this be? After all, it sounds reasonable that higher wages would result in layoffs. But while it may sound reasonable, it violates good business principles.

Any well run business will hire the number of workers it takes to deliver their product to customers in the most efficient way. If it hires too few workers, the product will not be able to be delivered in a fast and efficient way - and customers will go to another business that can do that. If it hires too many workers, it will waste money (cutting into profits).

The truth is that the appropriate number of workers will be hired regardless of whether the minimum wage is low or high.

Another lie told by the GOP is that a business would have to raise prices with a higher wage and thus lose out to a competitor. That makes no sense because all competitors would be paying the same minimum wage.

Don't believe the Republican lies! The minimum wage should be a livable wage.

No One Willing To Work Should Be Paid A Poverty Wage

 Inflation has made life hard for everyone but the rich. While the rich get much richer, most other Americans are lucky if their wage gains can just equal the rising inflation.

Since 2009, inflation has driven prices up by 46.6%. A dollar today will only buy about 68% of what it would buy in 2009. It's no wonder that inflation is one of the major issues in the 2024 campaign.

But while everyone (except the rich) is hurt by this, no one is hurt more than workers making the national minimum wage. In 2009, the minimum wage was raised to $7.25 an hour (about $290 a week or $15,080 a year). That's a wage that keeps a worker in poverty.

It is estimated that a worker should pay no more than 25% to 30% of their income to rent an apartment. But there is no state in the country where workers making the minimum wage can rent a decent apartment. Housing alone will eat up most of the minimum wage - leaving little to nothing for food, transportation, and other expenses. Not for a single person and especially not for a family.

The minimum wage should be raised to a wage that will lift workers out of poverty. The most often mentioned figure is $15.00 an hour. You might think that's a big jump (more than double the current minimum wage). It is, but it's the minimum needed to lift workers out of poverty.

A $15.00 an hour minimum wage would be about $31,200 a year. That's still less than half of the country's median wage (about $75,000). But it would allow a family to rise out of poverty and have a minimally decent standard of living.

Democrats have been trying to raise the minimum wage for several years now, but they have been blocked at every turn by Republicans. While Republicans want to give billionaires more tax breaks, they don't care about the millions of hard-working Americans living in poverty.

Do you think people willing to work hard should be paid a wage that keeps them in poverty? If you don't, then you should go to the polls in November and vote to put a Democrat in the White House - and Democratic majorities in both houses of Congress. 

In a rich nation like the United States, all citizens should share in the rising productivity - not just the millionaires and billionaires.

Many Disabled Workers Are Making Less Than Minimum Wage

Eric Garcia at MSNBC.com points out that disabled workers are being exploited by being paid less than the minimum wage -- and sadly, it is legal. Here is part of what he writes:

This past year has seen workers in numerous industries strike for better wages. Just last week, SAG-AFTRA, which represents actors, reached an agreement with producers in Hollywood. This came after the Writers Guild of America reached a similar agreement. Similarly, autoworkers made historic gains, thanks in part to the support of President Joe Biden.

But one group has not reaped the benefits of labor’s growing power: workers with disabilities. Despite many strides for people with disabilities, in what is an incredibly degrading relic from the pre-World War II era, the United States still allows employers to pay people with disabilities below the minimum wage. A February report from the Government Accountability Office found that employers who’ve gotten a certificate from the Department of Labor to pay people with disabilities these pittance wages employ about 120,000 such workers. Half earned an absolute pittance, less than $3.50 an hour. Finally, the Department of Labor is taking a step to end the practice.

In September, the department announced that it would hold “stakeholder engagement sessions” to review the program. The first such session was held last month. The last one takes place this week.

In 2020, candidate Joe Biden and all the major Democratic presidential candidates said they’d end subminimum wage labor for people with disabilities. That they all made such a promise showed how much the disability rights movement had pushed the conversation along. 

The Biden White House and congressional Democrats wanted an end to subminimum wage labor for disabled people included in the American Rescue Plan. That bill was Biden’s signature Covid-19 relief legislation, and in it, he wanted to raise the minimum wage to $15 for all workers. But when the Senate parliamentarian said raising the minimum wage couldn’t be included in a budget reconciliation bill, efforts to pay disabled people the same as everyone else died on the federal level. . . .

As the shockingly low pay these workers get indicates, the policy practice is exploitative. The February GAO report found that “almost all 14(c) workers had an intellectual or developmental disability, and most were White and of prime working age (25 to 54 years old0.” According to that report, “employers reported few 14(c) workers engaged in competitive employment — which includes earning at least minimum wage in a work setting with individuals without disabilities.”

A 2020 report from the U.S. Commission on Civil Rights found “Persistent failures in regulation and oversight” of employers by the Department of Labor and the Department of Justice. The report says “Section 14(c) may … raise legal issues under Title I of the 1990 Americans with Disabilities Act (ADA), which was intended to ensure wide-reaching and comprehensive civil rights protections for individuals with disabilities. Categorically, under Section 14(c), people with disabilities being paid a subminimum wage are not granted the same protections, nor are they offered the same opportunities that are available to people working at the minimum wage or above.” The report also notes that such workers are not allowed to unionize. . . .

The good news is that this practice has declined. Since 2010, the number of disabled workers in 14(c) facilities has declined from 3,117 to 1,567 in 2019. That number will likely decline as numerous states have ended the practice. And not just blue states: Republican governors, including decidedly MAGA ones like Henry McMaster of South Carolina and Bill Lee of Tennessee, have signed legislation ending the practice. Similarly, Texas Gov. Greg Abbott, who is paralyzed from the waist down and uses a wheelchair, signed legislation banning state contractors from paying people with intellectual and developmental disabilities below the minimum wage.

Even if they bicker with Democrats about the idea of a minimum wage as a whole, it makes sense for conservatives to support ending subminimum wage labor, especially if they believe people should be self-sufficient and, as they say, off the government dole.

But the push to end subminimum wage labor will likely face staunch opposition. The parents of many disabled workers support the places that have hired those workers, such as Goodwill, which has historically used 14(c) certificates and uses the term “special minimum wage” to avoid acknowledging that it pays people below minimum wage. Indeed, one of the dissenting commissioners in the Commission on Civil Rights report argued that getting rid of subminimum wage labor would cause people with disabilities to lose their jobs. 

Many of these arguments bear resemblance to the arguments that people have against raising the minimum wage in general. However, Vermont, the first state to get rid of subminimum wage labor, saw 80% of people who were previously paid less enter into competitive integrated employment. The other 20%, according to the National Council on Disability, went into a community support program.

The main argument against subminimum wage labor is that the work that people with disabilities do is no less valuable. Hiring  people with disabilities is not an act of charity; it’s not kindness.   People who are disabled who work do so for the same reason nondisabled people do: to support themselves and their families. They should be paid the same, too.

77% Say The Minimum Wage Is Too Low

The charts above are from the YouGov Poll -- done between August 2nd and 5th of a nationwide sample of 1,000 adults, with a 4 point margin of error.

Most Workers (And Seniors) Not Keeping Up With Inflation

Republicans are whinging about inflation - hoping inflation worries will help them win the midterm election. But that's more than a bit disingenuous. Inflation is hitting the poor, the working class, and seniors the hardest -- and those are not the groups Republicans are interested in helping. In fact, the Republicans want to cut government spending (especially spending to help the poor), cut Social Security and Medicare, and keep the minimum wage at a poverty level.

Here's how former Labor Secretary Robert Reich describes the situation:

Most of us don’t have paychecks that automatically increase to cover the rapidly-increasing costs of just about everything. As a result, inflation is making most of us poorer. 

But recipients of Social Security just got the largest inflation adjustment in four decades — 8.7 percent — effective December 2022. 

The media talk about this as a “boost” in Social Security benefits but it’s not. The adjustment simply enables people living on Social Security (more than 70 million of us) to maintain the purchasing power they had a year ago.

And it doesn’t even accomplish this, because medical and drug costs take a higher percentage of older Americans’ budgets than other Americans and have been rising even faster than inflation.

On the other hand, the people working at the federal minimum wage haven’t got an inflation adjustment. They’ve been getting poorer at a faster pace and for a longer time than most of the rest of us. 

The federal minimum wage is still $7.25 — just where it was in 2009, the last time the minimum wage was adjusted. (It’s the longest period of time without a minimum-wage adjustment since the federal minimum wage was put into place in 1938.) 

The chart below shows (in black) the real (inflation-adjusted, actual purchasing power) value of the minimum wage since its passage in 1938. (The blue line shows the nominal — non-inflation-adjusted — value.)

Workers paid the federal minimum of $7.25 today earn 23 percent less than what they (or their counterparts) earned 13 years ago, after adjusting for inflation, and 36 percent less than in 1968. 

This is bizarre, to say the least. As a nation, we’re far richer than we were in 1968. Per capita GDP then was just over $24,000. Today, it’s almost $60,000.

Because of Congressional inaction on the federal minimum, over two dozen states and several cities have raised their own state minimum wages. But in the rest of the country, states have punished low-wage workers by refusing to raise minimum pay. 26 states have gone so far as to pass laws prohibiting local governments from raising their minimum wage.

Why doesn’t the minimum wage rise with inflation, like Social Security? 

A big part of the reason is that big corporations and their trade associations — especially big retailers and restaurant chains — have lobbied intensely against any minimum wage increase. Their political power continues to grow even as the real value of the minimum wage continues to shrink. 

Remember: Corporations pay for the minimum wage. Taxpayers pay for Social Security.

Another reason Social Security keeps up with inflation while the minimum wage doesn’t is that Americans who receive Social Security — elderly and politically active — are far more likely to vote and demand cost-of-living increases than are people living at or near the minimum wage. 

But don’t grow too complacent about Social Security. Republicans and much of corporate America would like to do away with it. As Wisconsin Republican Senator Ron Johnson put it: “Social Security and Medicare, if you qualify, you just get it no matter what the cost… We ought to turn everything into discretionary spending so it’s all evaluated.”

So is it ever going to be possible to raise the minimum wage? Yes. 

I led the fight to raise it in 1996. Republicans controlled both houses of Congress at the time. Everyone told me it was impossible. But I sensed that raising the minimum wage was a popular issue. 

I asked Bill Clinton’s pollster to find out. He came back to me wildly enthusiastic. “85 percent of Americans believe the minimum wage should be raised!” he said. 

Armed with that poll, I convinced Clinton it was worth the fight. Then I took the poll to Democratic leaders in Congress, who became equally enthusiastic. 

It was a presidential election year, and Democrats immediately saw it as an issue they could bang over the head of Republicans. Fearing they would — and concerned about a voter backlash if they didn’t raise it — enough Republicans joined on to pass it. 

But is it possible to include an automatic inflation adjustment in the minimum wage? 

When I suggested it, Republicans balked. This didn’t surprise me. 

What surprised me was that Democrats also balked. Why?

"If it’s automatic, then we can’t fight about it,” a senior Democratic senator explained. “And in presidential election years, it’s a fight we like to have.”

Bottom line: Even if Republicans control one or both houses of Congress in 2024, that would be a good year to try to raise the minimum wage again. As to including an automatic adjustment for inflation, though, I’m less optimistic.

The $7.25 Minimum Wage Is Truly A Poverty Wage

The minimum wage remains at $7.25 and hour, and while some states have raised it a bit, nearly half of the states have continued to keep the minimum wage at the $7.25 level -- and show no signs of raising it anytime soon.

It needs to be raised at the federal level, so it would apply to all states -- even the red states that don't seem to care about their workers.

How bad is the current minimum wage? It hasn't been raised since 2009. And while it would buy $7.25 worth of goods in 2009, it now will only buy $5.27 worth of goods. That's a drop of 27% in buying power in the last 13 years.

At $5.27 an hour, the minimum wage is truly a poverty wage. A minimum wage worker with a full-time job (40 hours a week) would only bring home enough weekly to buy about $210.80 worth of goods. The monthly wage would buy only about $843.20 worth of goods.

Could you live on $843.20 a month (before deductions)? No one can!

The minimum wage must be raised to a livable level -- at least $15.00 an hour. Anything less is a poverty wage. And it's not right to force a full-time worker to accept a poverty wage!

Sadly though, as long as the Republicans hold veto power in Congress, the minimum wage will not be raised. They must be voted out of power so low-wage workers (between 20% and 25% of the national work force) can make a living. The $15.00 wage is not going to make anyone rich (or even middle class), but it will allow them to buy the necessities they and their families need.

It will also help other workers by putting an upward pressure on all wages.

Our government doesn't hesitate to give more to the rich (the people who don't need it). It's time they helped workers -- the people who need a bit of help.

The Tipped Minimum Wage Is Shameful

From the Economic Policy Institute.
 

What Is A Living Wage (And Is It A Moral Imperative)?

In the last couple of years, we have heard a lot about a "living wage". The idea is that anyone who works hard at a full-time job should make a wage that keeps them out of poverty. Democrats have tried to raise the minimum wage to $15 an hour (over several years), but Republicans have blocked it. The Republicans want to keep the current minimum wage ($7.25 an hour), even though it leaves many full-time workers unable to lift their families out of poverty -- and some Republicans would like to abolish the minimum wage altogether.

This raises a couple of questions. Just what is a living wage? And, is it a moral imperative for a business to pay a living wage?

Here's just a part of what Nick Romeo says on this topic in The New York Times:

The idea of a living wage is an old dream, with origins in the work of thinkers as ideologically diverse as Adam Smith, St. Thomas Aquinas and Karl Marx. While its exact meaning is often left conveniently vague, Theodore Roosevelt offered a basic definitionin a 1912 speech: A living wage should let workers “secure the elements of a normal standard of living,” including education, recreation, child care, a cushion for periods of sickness and savings for old age.

Roosevelt was making a moral claim, not just an economic one. He saw paying workers enough to meet these basic standards as a matter of justice.

More than a century later, millions of working Americans are still paid too little to afford the modest elements in Roosevelt’s vision. Such low wages are not inevitable; they reflect political and moral choices about what defines a “normal standard of living,” and who deserves to enjoy one. . . .

Not paying people enough to live implies indifference to whether they continue to live, undermining basic standards of decency and further eroding the foundations of a functional democracy. With many companies now inching toward more humane compensation, the question of how to define a living wage deserves broader public discussion.

For much of American history, people understood that morality was profoundly relevant to wage-setting. The idea for a living wage was pioneered by religious thinkers like John Ryan, a priest whose 1906 book, “A Living Wage: Its Ethical and Economic Aspects,” argued it should enable not only the absolutely essential, but also “the conditions of wider and fuller life.” Other Progressive figures like Roosevelt and the labor leader Samuel Gompers also embraced this argument, and workers themselves lobbied for the creation of the Bureau of Labor Statistics so that they would have accurate data on wages to inform their campaigns.

Around the same time, however, followers of a very different tradition were claiming that morality had no relevance to the question of wages. In 1926, one scholar called a “just” wage “a contradiction in terms.” By the 1980s, many economists had fully embraced this view, and a philosopher claimed the competitive market was a “morally free zone.”

But to exclude moral considerations from markets is itself a moral choice, even if the calculus is not always simple. Some employers with razor-thin margins might be unable to pay a living wage, and even Ryan argued that such businesses should not be obligated to do so during a rough patch. In the long run, however, Ryan held that part of being a successful business was paying a living wage. Those that did not should eventually go out of business.

And while it is a common refrain that a living wage would force employers to hire fewer workers and thus destroy jobs, there are persuasive empirical and philosophical responses to this objection. The stagnation of real wages for American workers does not reflect their low productivity so much as the increasing concentration of wealth within companies. In 1965, the average top chief executive made 21 times as much as a typical worker in America. In 2020, the ratio was 351 to 1. . . .

 The line between “living” and merely subsisting is something that a democratic society must publicly debate and ultimately embody in lasting policies.

Gompers argued in 1898 that a living wage should be “sufficient to maintain an average-sized family in a manner consistent with whatever the contemporary local civilization recognizes as indispensable to physical and mental health, or as required by the rational self-respect of human beings.” For anyone less than pleased with the direction that America’s “contemporary local civilization” is trending, it’s worth asking whether all of our fellow citizens have access to jobs that pay what “the rational self-respect of human beings” requires.

NOTE -- One of the most widely used "living wage calculators" is by Amy Glasmeier at MIT. You can access it here.

Raising The Minimum Wage To $15 Would Help Everyone

 

Here are some interesting facts about raising the minimum wage to $15 an hour (from the Economic Policy Institute):

The Raise the Wage Act would have the following benefits:

• Gradually raising the federal minimum wage to $15 by 2025 would lift pay for 32 million workers—21% of the U.S. workforce.
• Affected workers who work year round would earn an extra $3,300 a year—enough to make a tremendous difference in the life of a cashier, home health aide, or fast-food worker who today struggles to get by on less than $25,000 a year.
• A majority (59%) of workers whose total family income is below the poverty line would receive a pay increase if the minimum wage were raised to $15 by 2025.
• A $15 minimum wage would begin to reverse decades of growing pay inequalitybetween the most underpaid workers and workers receiving close to the median wage, particularly along gender and racial lines. For example, minimum wage increases in the late 1960s explained 20% of the decrease in the Black–white earnings gap in the years that followed, whereas failures to adequately increase the minimum wage after 1979 account for almost half of the increase in inequality between women at the middle and bottom of the wage distribution.
• A $15 minimum wage by 2025 would generate $107 billion in higher wages for workers and would also benefit communities across the country. Because underpaid workers spend much of their extra earnings, this injection of wages will help stimulate the economy and spur greater business activity and job growth.

• Nearly one-third (31%) of African Americans and one-quarter (26%) of Latinoswould get a raise if the federal minimum wage were increased to $15.
• Almost one in four (23%) of those who would benefit is a Black or Latina woman.
• African Americans and Latinos are paid 10%–15% less than white workers with the same characteristics, so The Raise the Wage Act will deliver the largest benefits to Black and Latino workers: about $3,500 annually for a year-round worker.
• Minimum wage increases in the 1960s Civil Rights Era significantly reduced Black–white earnings inequality and are responsible for more than 20% of the overall reduction in later years.

• More than half (51%) of workers who would benefit are adults between the ages of 25 and 54; only one in 10 is a teenager.
• Nearly six in 10 (59%) are women.
• More than half (54%) work full time.
• More than four in 10 (43%) have some college experience.
• More than a quarter (28%) have children.

• Essential and front-line workers make up a majority (60%) of those who would benefit from a $15 minimum wage. The median pay is well under $15 an hour for many essential and front-line jobs; examples include substitute teachers($13.84), nursing assistants ($14.26), and home health aides ($12.15).
• More than one-third (35%) of those working in residential or nursing care facilities would see their pay increase, in addition to home health aides and other health care support workers.
• One in three retail-sector workers (36%) would get a raise, including 42% of workers in grocery stores.
• More than four in 10 (43% of) janitors, housekeepers, and other cleaning workers would benefit.
• Nearly two-thirds (64%) of servers, cooks, and other food preparation workerswould see their earnings rise by $5,800 on a year-round basis.
• Ten million workers in health care, education, construction, and manufacturing would see a raise—representing nearly one-third (31%) of the workers who would see a raise.

• There are 1.3 million tipped workers throughout the country who are paid as little as $2.13 per hour because Congress has not lifted the federal tipped wage in 30 years. Another 1.8 million tipped workers receive wages above $2.13, but still less than their state’s regular minimum wage.
• Seven states (Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington) have already eliminated their lower tipped minimum wage. In these “one-fair-wage” states, tipped workers in these states are paid the same minimum wage as everyone else before tips. For restaurant servers and bartenders, take-home pay in one-fair-wage states is 21% higher, on average, than in $2.13 states.
• Having a lower minimum wage for tipped jobs results in dramatically higher poverty rates for tipped workers. In states that use the federal $2.13 tipped minimum wage, the poverty rate among servers and bartenders is 13.3%—5.6 percentage points higher than the 7.7% poverty rate among servers and bartenders in one-fair-wage states.
• Eliminating the lower tipped minimum wage has not harmed growth in the restaurant industry or tipped jobs. From 2011 to 2019, one-fair-wage states had stronger restaurant growth than states that had a lower tipped minimum wage—both in the number of full-service restaurants (17.5% versus 11.1%) and in full-service restaurant employment (23.8% versus 18.7%).

• High-quality academic scholarship confirms that modest increases in the minimum wage have not led to detectable job losses.
• After the federal minimum wage was raised to its highest historical peak in 1968, wages grew and racial earnings gaps closed without constricting employment opportunities for underpaid workers overall.
• Comprehensive research on 138 state-level minimum wage increases shows that all underpaid workers benefit from minimum wage increases, not just teenagers or restaurant workers.
• Multiple studies conclude that total annual incomes of families at the bottom of the income distribution rise significantly after a minimum wage increase. Workers in low-wage jobs and their families benefit the most from these income increases, reducing poverty and income inequality.
• By providing families with higher incomes, minimum wage increases have improved infant health and also reduced child abuse and teenage pregnancy.