As you may have read, Senator Patty Murray and Congressman Bobby Scott have introduced a bill to raise the federal minimum wage. It’s the latest in an ongoing, going-nowhere-now series of Democratic efforts to raise the wage.
The Murray-Scott bill has several major features in common with its recent predecessors, but also several that are somewhat different. What foreseeably won’t be different are the cavils opponents will raise, not to mention the fate of the bill in Congress — this Congress, at least.
But Raise the Wage — the name of the bill, as well as its main thrust — is hardly a futile gesture. For one thing, it gives Democrats a popular, differentiating issue to campaign on.
For another, the bill can further focus attention on the shrinking value of the current minimum wage, the plight of workers who receive it and the safety-net costs higher-income taxpayers cover to keep those workers and their families from utter deprivation.
What the Bill Would Do for the Federal Minimum Wage
The bill would gradually raise the federal minimum wage from $7.25, where it’s been stuck since mid-2009, to $12.00 in 2020. The first phase of the increase — 75 cents — would kick in at the beginning of next year. The wage would then rise by $1.00 each year thereafter.
After 2020, the wage would be adjusted annually by the same percent as the national median hourly wage increased. This is one of the differences from the earlier bills, which provided for annual adjustments based on consumer price inflation.
The Economic Policy Institute, which provided analytic support for the new approach, argues that benchmarking to the median wage is fairer because adjusting merely for inflation “assumes that minimum-wage workers should not expect their standard of living to improve relative to the standard achieved by workers 50 years ago.”
In 1968, when the federal minimum wage was worth $10.79 in today’s dollars, it was slightly over half the median. It’s about 37% of the median now and would return to roughly the 1968 ratio, according to EPI estimates.
What the Bill Would Do About the Tip Credit Wage
The Murray-Scott bill would also very gradually phase out the tip credit wage, i.e., the minimum employers must pay employees who receive more than $30 a month in tips. The federal tip credit wage is currently $2.13 an hour, as it has been since 1991. And it’s still the legal sub-minimum in 17 states.
The bill would boost it to $3.15 next year and then increase by no more than $1.05 an hour until it equaled the regular federal minimum. The same adjustments based on the median wage increase would then apply.
This is more ambitious than bills introduced in the last several years, which would have gradually raised the tip credit wage until it reached 70% of the regular federal minimum and then preserved that ratio.
What Opponents Will Say
Quick out of the box, economist/blogger Jared Bernstein anticipates “the same tired arguments” we hear every time anyone floats the notion of a minimum wage increase. He heads his post with a graphic from EPI that dispatches with some of the myths.
No, minimum wage workers aren’t mostly teenagers. Only 11% are under 20 — many considerably older, since their average age is 36. No, they’re not earning some extra spending money for fancy cell phones and the like. On average, their earnings make up more than half their family’s income.
And despite what we will undoubtedly hear again, a minimum wage increase will not hurt those it’s intended to help. A recently-published analysis of more than 200 studies concludes that “increases in the minimum wage … have very modest or no effects on employment, hours, and other labor market outcomes.”
How Many Workers Helped
EPI estimates that the newly-proposed increase would benefit more than 37.7 million workers by 2020 — more than one in four of the entire workforce. This includes not only those who’d be legally entitled to increases, but about 7 million whose wages are somewhat higher. They’d get a bump-up as employers adjusted their pay scales to preserve a differential.
The projected impact is so broad because the Murray-Scott bill would lift minimum wages even in the majority of states and the District of Columbia that now have minimums higher than the federal. And I would assume it’s even broader because the vast majority still permit a sub-minimum tip credit wage — a factor EPI’s estimates apparently don’t fold in.
I’ll have more to say about these angles in a separate post.
In the interim, you can demonstrate support for the Raise the Wage bill by signing a petition EPI has launched.