It’s been three years and two months since the last phase of the latest federal minimum wage increase kicked in. By the time it did, the wage had already lost nearly 5% of the value it had when Congress increased it.
This always happens with federal minimum wage increases. And when Congress finally overcomes the barriers to passing another increase, it doesn’t fully make up for the value lost over time.
If the minimum wage were worth as much as it was in 1968, it would be $10.55 an hour instead of just $7.25 — less than what’s needed to lift a family of two with a full-time minimum wage worker above the poverty line.
A pair of bills pending in Congress — Senator Tom Harkin’s and Congressman George Miller’s Fair Minimum Wage Act — would keep the wage from losing value, though not fully make up for what it’s already lost.
The bills would increase the minimum wage, in steps, to $9.80 over a two-year period. They’d also index it to the CPI-U — a commonly-used Consumer Price Index — so that it would subsequently rise with the cost of living.
A bill introduced somewhat earlier by Congressman Jesse Jackson, Jr. would raise the minimum wage immediately to $10.00 an hour, thus almost living up to its title — the Catching Up to 1968 Act. It too would then index the wage.
None of these bills stands the chance of an iceberg in hell so long as the Republicans hold a majority in the House and at least enough seats in the Senate to block a substantive vote on whatever they choose.
But say, for the sake of argument, that Congress passed the more moderate Harkin-Miller bill some time early in the new year.
And say, for the sake of argument, that whoever is sitting in the White House signs it. An open question if that’s Mitt Romney. Not so if Obama, assuming, as we may, that the Democratic party platform reflects his views on the issue.
Still, an hourly wage of $8.10 next year seems a paltry thing. Why do so many advocates invest so much in a minimum wage increase?
I’m not asking this rhetorically. It’s a question I’ve asked myself — and so tried to find answers for. Best I’ve come up with follow.
The relatively modest, phased-in increase reflects political realities. A significantly larger increase, however justified, could cause some potential supporters to balk.
Even the modest increase would be good for minimum wage workers, of course. But they’re not the only ones who’d benefit.
An estimated 8.7 million workers earning somewhat more than the new minimum wage would get raises because of the so-called “spillover effect.”
In other words, employers would adjust their pay scales upward to preserve a differential between their lowest-paid workers and those who, for various reasons, have been getting more.
Demos, in fact, argues that raising work standards, including the minimum wage, would “raise the floor for all working people.”
The notion here, I think, is that there’d be an spillover effect. If $9.80 became the rock-bottom minimum, many — though far from all — employers would peg their entry-level wage somewhat higher. Other wages would get a bump-up as a result.
The impact on struggling working families could be very large indeed because we’re seeing significant growth at the low end of the wage scale.
Our recovery has created 2.7 times more jobs in lower-wage occupations than in those at mid-level or higher, according to a recent analysis by the National Employment Law Project.
This may not be a temporary phenomenon. Many of the jobs where the greatest growth is projected over the longer term fall into the low-wage category, e.g., retail salespersons, home care aides, food preparation and food service workers.
There’s a sound economic argument for ensuring that these folks earn a living wage. Same as the argument for increasing the minimum wage now.
More take-home pay will put more money into the economy, as families spend at least some of the extra on goods and services. More demand will move businesses to hire more people — at least for positions they can’t automate or offshore.
There’s also a fairness argument. When employers take what Restaurant Opportunities Centers United calls “the low road,” we taxpayers in effect subsidize their excess profits because under-paid workers enroll in safety net programs to help meet their basic needs.
Some state-level studies have put hard numbers on this cost shift — very large numbers.
Finally, there’s what I guess we could call a justice argument — or perhaps a values argument.
Demos frames it nicely. “Americans believe that hard work should be rewarded — people who go to work every day should not then be forced to raise their families in poverty.”
A large majority of Americans do believe this — all demographic groups, except for Tea Partiers and Fox News junkies.
Suggests that if our federal policymakers were more attuned to their constituents than their deep-pocket donors, we could get that overdue minimum wage increase passed.