Time to Make a Deal on the Federal Minimum Wage

By Wade Rathke
Center for Working-Class Studies

The federal minimum wage has been stuck at $7.25 per hour since 2009.  Until last year, when the unemployment rate dropped almost to the level of full employment, wages were stagnant, exacerbating inequality.  In 2018, average hourly earnings went up 3.15% and closed the year with a 3.9% jump.  Even with those recent adjustments, workers still need a federal minimum increase.

The Raise the Wage Act offers the prospect for change.  The bill was introduced in May 2017 by Rep. Bobby Scott (D-VA), the ranking Democrat on the House Committee on Education and the Workforce, but it died in committee in 2018 with 170 co-sponsors, Democrats all.  It proposed a dollar-a-year increase over seven years, eventually reaching $15.00 – more than twice the current minimum.  It would also phase out lower pay for tip-credit workers who are currently frozen at $2.13 per hour as well as disabled worker exceptions.

The Fight for $15 campaign, largely engineered and financed by the Service Employees International Union, has been a key force in defining $15.00 an hour as the goal.  Their work has helped set eight states on the path to establishing minimum wages of between $12 and $15 per hour in coming years, including Arizona, California, Colorado, Maine, Massachusetts, Minnesota, New York, and Washington.  Thirteen cities, including New York City, Seattle, and San Jose, are already at $15 or higher.  While Fight for $15 has created momentum for the new Democratic House majority, today’s leaders should not forget the lessons learned from decades of living wage fights.

On January 18, 1997, ACORN and Local 100, United Labor Unions (then affiliated with the SEIU), presented voters in Houston, Texas with what seemed a radical proposal at the time: a city ordinance to raise the minimum wage to the level of $6.50 per hour for all workers.  Only months before, the federal minimum had finally risen from $4.25 per hour to $4.75.  In a patronizing campaign against us, service industry and general business employers insisted that they understood our demand, but we were going about it the wrong way, and our proposal would cost jobs.  While we won in lower-income and working-class districts, we lost the election 2 votes to 1. In River Oaks, the district where former President George H. Bush lived and voted, we garnered just one vote.

Soon after, ACORN put a similar proposal before Denver voters, asking them to approve a minimum wage of $6.25.  An expensive, blunt force campaign in the final two weeks by the hotel and restaurant association and fast food operators swamped us. Again, we lost two to one loss even as we swept black and brown, lower income, and working precincts throughout the city.

We learned a key lesson from those losses: do the research. In Arizona, Michigan, Florida, and Ohio, we used polling to find out the rate that would gain support from at least 60% of voters. When we did that, even strident corporate campaigns didn’t block our way. Where we couldn’t do polling, we pegged the increase more modestly as a premium above the federal minimum, usually one dollar, which won in New Orleans, Missouri, and elsewhere. Once we learned to propose acceptable target rates, we won many more votes, and no living wage statewide proposition has lost at the ballot box in more than a dozen years. Between 1996 and 2008, we won more than 125 “living wage” campaigns around the country, delivering billions of dollars’ worth of raises to millions of workers. Where we won increases indexed to cost-of-living, like Florida, lower-waged workers continue to benefit.

State and local minimum wage and living wage campaigns have continued in full force and fury.  Approximately twenty states and twenty-three localities now have higher base hourly wage rates than the federal standard, and some 5.2 million workers began this year with a wage increase. Individual bumps in annual pay from $90 to $1300 add up to about $5.4 billion of increased income for workers. This is good news. But workers in twenty-nine states – about 2.2 million people — are still stuck at $7.25 per hour – or less!

It’s time to make a deal.

Reportedly, Democrats believe they now have enough votes to pass something like the Raise Wages Act and demand that the Senate either support, negotiate, or reject raising workers’ wages.  We need to force politicians to finally deliver, whatever the intraparty polarization and squabbles.

We also need to remember the lessons from the past.  In Houston, Denver, and initially New Orleans, we lost support when we proposed raising the minimum 37% over the existing federal standard.  To get to $15 on a fast track would be a jump of more than 100%, doubling the minimum wage.  Pew Research found only 52% support for that big an increase.

It’s just not likely to happen all at once.

Even raising the minimum $1 per year is steep and unprecedented. The last ten-year freeze of the federal minimum, between 1997 and 2007, the raise was seventy cents annually for three years l.  A dollar per year for seven years will be hard to win.

But low wage workers need a deal, and at this point, just about any raise would do. Fifty more cents an hour for a full-time, 2080 hours a year worker is over $1000.  Sure, a dollar would be even better, but any raise would be a godsend. This would be even better if we could finally win some form of automatic indexing for future increases and at least lift the cap on tipped workers’ wages.  Both of those adjustments would be worth paying some real money to achieve at the negotiating table.

Does making a deal hurt the states and cities that are already over the federal minimum wage?  No, indeed.  As President John F. Kennedy argued, raising the minimum wage “lifts all boats,” because workers making $10 or $12 an hour would fight to keep their hourly wages a few dollars higher than the minimum wage. If employers want to keep those workers, they will have to pay more.

Of all of the divisions in the United States now, the wage gap might be easiest to attack.  Even Republicans feel the pressure as the 2020 election comes into view. We need to make it hard for them to defend keeping the minimum wage at $7.25 an hour.  They will argue that $15 an hour is catastrophic, and we must be prepared to fight back. Republicans may not like bargaining over a hike in the minimum wage, but other than the stone-cold ideologues, some of whom are in the White House, they will be ready to do so.

It’s time to demand an increase in the federal minimum wage but also to talk realistically about the terms of an agreement.  Lower wage workers must have a raise, and they need it now. We can’t wait for a new President or a new Congress.

***

Reposted from Working-Class Perspectives

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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