The U.S. economy can afford a $15 minimum wage

From the Economic Policy Institute

The federal minimum wage was established in 1938 to help ensure that regular employment provided a decent quality of life. By making periodic increases in the minimum wage, Congress also guaranteed that the country’s lowest-paid workers would share in the benefits of broader improvements in the economy. For the first 30 years of the minimum wage’s existence, regular raises allowed the minimum wage to keep pace with growth in economy-wide productivity. But, as the graph shows, since the 1970s Congress has failed to adjust the minimum wage to match the economy’s capacity for higher wages—leaving low-wage workers behind.

The bottom line shows how inflation has eroded the buying power of a minimum wage income even as the economy grew and was able to afford a higher minimum wage. If you were paid the $7.25 minimum wage in 2017, you made 27 percent less—in inflation-adjusted terms—than someone who earned the minimum wage in 1968 (when the value of the federal minimum wage peaked, at $9.90 in 2017 dollars). The middle line shows that if the minimum wage had kept up with average wage growth for typical U.S. workers (specifically, production and nonsupervisory workers, who constitute essentially the bottom 80 percent of the workforce) since 1968, it would be $11.62 an hour. But even that would not have been sufficient to distribute the fruits of economic growth equitably. If the minimum wage had kept pace with rising productivity since 1968, someone earning the minimum wage in 2017 would have received $19.33 an hour—and millions of people earning above the minimum wage today would also be getting higher wages than they currently do.

The expectation that the minimum wage rise in step with broader trends in the economy would not have been unreasonable for previous generations—that was the trend throughout the 1950s and 1960s. Today’s minimum wage workers have been harmed both by the failure to raise the minimum wage in step with pay for typical workers and by the huge and growing gap between these nonsupervisory wages and economy-wide productivity. The Raise the Wage Act of 2017 would raise the federal minimum wage to $15 by 2024. Such a raise would certainly bring the pay of minimum wage workers closer to providing a decent quality of life, even though it would still fall short of what the economy could have delivered for low-wage workers over the past 50 years.

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Reposted from EPI

Posted In: Allied Approaches

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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A Friendly Reminder

A Friendly Reminder