This Is Why Washington Will Keep Ignoring Minimum Wage
MEGHAN FOLEY GOOGLE+ TWITTER | MORE ARTICLES
OCTOBER 15, 2014
MEGHAN FOLEY GOOGLE+ TWITTER | MORE ARTICLES
OCTOBER 15, 2014
Republican Senator and Minority Leader Mitch McConnell of Kentucky has indicated that the question of increasing the federal minimum wage has taken up too much of the Senate’s time. He told wealthy donors – at a secret strategy conference organized in June by the politically active Koch brothers — that if the party secures the Senate majority in November’s midterm elections, Republican lawmakers will not “be debating all these gosh darn proposals,” unlike now, where all senators do is “vote on things like raising the minimum wage,” a proposal McConnell said will cost the country 500,000 jobs. But while studies have shown that money talks in American politics, and “the preferences of the average American [voter] appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy,” the issue of minimum wage cannot be easily ignored when thousands of Americans in cities across the United States are protesting, demanding that they be paid a living wage of $15 and be allowed to unionize.
Last Thursday’s national strike, drawing protesters in around 150 cities, represented an intensification of the two-year campaign to raise hourly pay for fast-food workers. Organized by the Service Employees International Union and various other labor groups under the banner “Fight for 15,” the strikes aimed to draw attention to the fact that that a great majority of workers in the fast-food, hospitality, and other service industries continue struggle on low incomes while the broader recovery narrative focus on relatively strong job creation numbers, the stock market rally, and the slowly return to healthy economic growth.
“They say the economy is getting better, but we’re still making $7.50,” Latoya Caldwell, a Wendy’s worker who was arrested with hundreds of others, told NBC. With the growing visibility of the strikers and their cause, Caldwell believes that she and her fellow protesters are “a movement now.” Indeed, organizers have said they believe it to be the largest demonstration of its kind.
“The fast-food workers have captured the imagination of the nation,” Mary Kay Henry, the International President of SEIU, one of the country’s largest unions, commented in a recent press release. Of course, labor politics experts do not widely expect that these strikes will provide the needed impetus for Congress to act on the issue of a minimum wage hike or for union rights to be granted in the short-term. However, it is also true that the strikes have captured the public’s attention, and that attention has motivated lawmakers in some cities like New York City to consider the conditions of low-wage workers.
Minimum Wage Is Rising Despite Congress
Thirteen states raised the minimum wage on January 1, 2014. Nine of those — Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont and Washington — decided to lift the lowest legal hourly pay and index future minimum wage increases to price inflation. Connecticut passed legislation boosting hourly wages to $10.10 by 2017 — the same rate President Obama has asked Congress to implement for the federal minimum wage; in January 2013, New Jersey Governor Chris Christie vetoed minimum wage legislation, but ten months later, 61 percent of voters approved a ballot measure to raise minimum pay from $7.25 to $8.25; New York has passed a bill hiking minimum wage to $9 in 2015; Rhode Island’s Democratic Governor Lincoln Chafee signed a bill in July increasing minimum wage from $8 to $9; Maryland’s state legislature approved a plan to raise the wage floor from $7.25 to $10.10 by 2018; and, on July 1, Washington D.C.’s minimum wage workers say hourly pay increase from $8.25 to $9.50. Hawaii, Minnesota, Delaware, and West Virginia also passed legislation lifting the wage floor.
More than 120 cities and counties across the United States have implemented what is known as livable wages of between $12 and $15 per hour. At the beginning of the year, SeaTac, a community around Seattle-Tacoma International Airport, implemented a $15 per hour minimum wage, becoming the first jurisdiction in the country to set a wage that high. Seattle followed suit; it was the first major city to approve a $15-per-hour minimum wage. Both San Francisco and Santa Fe have moved minimum wage higher independently of state levels as well. As of the beginning of August, 23 states plus Washington D.C. have set their lowest legal wage above the level mandated by the federal government
Other states, including Alaska and South Dakota, will see initiatives to raise minimum wage on their November ballots. New York, San Diego, Chicago, Los Angeles, and Portland, Maine are weighing increases. Both worker advocates and labor organizers believe that ballot initiatives are a viable means to enact minimum wage increases, especially in states where elected officials have attempted to stifle the issue. However, Oklahoma has banned local minimum wage increases.
That state seems to be the exception in growing popularity of the movement to lift minimum wage; in fact, according to a recent Gallup poll, 76 percent of Americans believe the federal government should lift the wage floor to at least $9 per hour. More than two-thirds of small business owners support a higher minimum wage, despite politicians claims that minimum wage increases cost jobs and productivity. Even a number of major U.S. business have set higher wage; Ikea, Gap, Recreational Equipment, Inc., Whole Foods, Trader Joe’s, Ben & Jerry’s, and Costco all pay more than $7.25 per hour.
Costco pays starting employees an hourly wage of $11.50 per hour, and the average employee wage is $21 per hour. The company’s Chief Executive Officer and President Craig Jelinek has publicly endorsed raising the federal minimum wage to $10.10 an hour. “I just think people need to make a living wage with health benefits,” Jelinek told Bloomberg. “It also puts more money back into the economy and creates a healthier country. It’s really that simple.”
Is the Federal Minimum Wage Worth Less?
The federal minimum wage of $7.25 has not been adjusted in five years. Had the national wage floor been set to increase regularly in conjunction with inflation as some states have proposed to do, minimum wage would now be $10.90. In 1938, the Fair Labor Standards Act first established minimum wage at 25 cents per hours, and over the past 76 years, the wage floor has been lifted 22 times. But thanks to legislative stalemate, inflation-adjusted minimum wages in the United States have fallen in both absolute and relative terms for a most of the past forty years. Adjusted for inflation, the purchasing power of a minimum wage income peaked in 1968, when the wage floor was set at $10.95 (in 2014 dollars). Since the minimum wage was last raised in 2009, it has lost 5.8 percent of its real value, or purchasing power, to inflation, meaning the amount that the annual income of a minimum wage worker earns has decreased by approximately $1,500 — or more than twice the average monthly rental of a one-bedroom apartment. Erosion of the minimum wage over the past four decades has been a main contributor to wage inequality.
For many years, America’s minimum wage has been low by international standards; according to The Economist, it equaled 38 percent of the median wage in 2011 — almost the lowest in the OECD. After the wave of retail worker strikes swept across the United States in 2013, the issue of minimum wage was again propelled into the forefront of the national debate in 2014 by President Barack Obama’s State of the Union Address. “Americans understand that some people will earn more than others, and we don’t resent those who, by virtue of their efforts, achieve incredible success,” said the president, who asked Congress in last year’s address to lift minimum wage. “But Americans overwhelmingly agree that no one who works full-time should ever have to raise a family in poverty.”
Low-wage, non-union employees of Wal-Mart and fast-food chains like McDonald’s, Wendy’s, and Burger King — the giants of the post-financial crisis economy — drew attention to the issue of America’s minimum wage by striking throughout 2013. Union strategists had hoped the presidency of Barack Obama would set in motion a transformation of the labor law regime by passing legislation to increase the federal minimum wage. Obama began 2013 by proposing in his State of the Union address a $1.25-per-hour increase to the $7.25-per-hour federal minimum wage, along with a plan to index minimum wage to inflation. In support of that increase, he explained that as a result, “employers may get a more stable workforce due to reduced turnover and increased productivity.” However, Obama’s attempts to increase the United States minimum wage through legislation stalled in Congress in 2013, and his campaign to bring the wage floor to $10.10 has yielded no results nationally.
Who Earns the Minimum Wage in the United States?
It will take an act of Congress to increase the lowest legal pay for the approximately 3.3 million minimum wage workers across the United States who earn $7.25 per hour or less and improve the wages of the more than 28 million people who earn less than $10.10 per hour, many of whom do not fit the low-wage stereotype of a teenager with a summer job. Their average age is 35 years-old; a majority work full-time; more than one-fourth are parents; and, as often as not, they earn half their households’ total income.
