Minimum Wage

Over the past few years, we’ve all heard a lot of people blame a lot of different things for high unemployment. Is it high taxes? Burdensome regulations? An angry jobs monster?

This week, Dylan Matthews of the Washington Post reviewed economic evidence which reveals that the biggest driver of high unemployment is low demand. Over 8 percent of Americans are unemployed, and lower-income and middle-class Americans have seen their income and wealth decrease over the last decade. So as you might imagine, many are pinching their pennies and spending less on goods and services. The end result is that businesses don’t have enough money or confidence to hire more workers.

The key, then, to really chipping into high unemployment numbers is creating more demand for goods and services. Matthews suggests looser monetary policy and fiscal stimulus. Here’s another idea: increase the minimum wage. Read more »

If you’ve been following our work on the minimum wage over the past several months, you know that the federal minimum wage is just $7.25 per hour and the minimum cash wage for tipped workers is a mere $2.13 per hour. These wages, which are not adjusted for inflation, are falling farther behind every year. In fact, the earnings of a single mom with two kids who works at a minimum wage job full time are thousands of dollars below the poverty line.

Although Congress is out of town for a few weeks, work on federal and local minimum wage campaigns continues to move forward. Nationally, the Economic Policy Institute (EPI) just released a great analysis that underscores the economic and social benefits of the minimum wage. EPI’s analysis, How raising the federal minimum wage would help working families and give the economy a boost, shows that the bills introduced just a few weeks ago in the House and Senate that raise the minimum wage to $9.80 over three years (and adjust for inflation after that) and the cash minimum wage for tipped workers to 70 percent of the minimum wage would lift the wages of more than 28 million workers, the majority of whom (55 percent) are women. The analysis also shows that raising the minimum wage would create an estimated 100,000 new jobs by putting money in the pockets of people who are ready to spend it on goods and services, thus increasing consumer demand. Interested in how raising the federal minimum wage might affect your state? EPI has those numbers, too. Read more »

Just this Tuesday, workers and advocates joined together in a National Day of Action to fight for an increase in the minimum wage. Two days later, we have cause to celebrate.

Today, Representative George Miller and Senator Tom Harkin introduced the Fair Minimum Wage Act of 2012. In a strong showing of support in the House, the bill had over 100 cosponsors who recognize the importance of raising the nation’s minimum wage.

Millions of workers – mostly women – struggle to make ends meet on minimum wage earnings. The last increase to the federal minimum wage came three years ago, to just $7.25 per hour. This wage adds up to only $14,500 per year for full-time, year-round workers – wages that would leave a working mother and two children below the poverty line. Read more »

$7.25 an hour. Imagine feeding a family on that. That’s the magic trick low-wage working women – who make up 2/3 of those earning minimum wages or less – have to perform on a daily basis.

As Kate Gallagher Robbins pointed out yesterday, an hourly wage of $7.25 leaves a person working full time year round with just $14,500—or $3000 below the poverty line for a mom with two kids.

But where does that $7.25 an hour leave workers who can’t get a full-time job? Involuntary part-time work is a huge problem for low-wage workers in today’s labor market. BLS data from 2011 (PDF) show that 8.5 million people were in part-time work for economic reasons like slack work, only being able to find a part-time job or seasonal work.

Instead of multiplying $7.25 by 40 hours a week, for these workers the math looks more like $7.25 x 20 or 25 hours (and in many cases, even fewer hours). In other words, workers earning minimum wages in involuntary part-time jobs are hit much harder by the painfully low minimum wage. Read more »

Raising the minimum wage, as proposed in the Rebuild America Act, would help women in a lot of ways. It would help pull women and their families out of poverty, narrow the wage gap, and strengthen the economy. But it would also help women in another way you might not have thought of – by improving their retirement security.

How is it that raising the minimum wage now would help women years down the line when they retire? For starters, lower earnings mean less money available to set aside for retirement. Increasing the minimum wage would give women a little extra money to save for the future. Read more »

True or false: raising the minimum wage is bad for the economy.

False. While many opponents of raising the minimum wage would have you believe otherwise, the truth of the matter is that raising the minimum wage is good for the economy. So the next time you run into a critic of raising the minimum wage, here are three points to help you set the record straight.

1. Raising the minimum wage does not cause job loss, even during periods of recession. A recent report by the Economic Policy Institute (EPI) reviewed several studies that found that minimum wage increases do not have negative effects on the labor market. The most recent study by Allegretto, Dube, and Reich (2011) looked at the impact of raising the minimum wage at different phases of the business cycle between 1999 and 2009. The study didn’t find evidence that minimum wage increases caused any job loss, even during the Great Recession of 2007-2009.

Today, July 24th, marks three years since the last time the federal minimum wage increased. It currently stands at a measly $7.25 per hour, just $14,500 for people who work full time, year round. Rep. DeLauro (D-CT) and Rep. Braley (D-IA) and Senator Harkin (D-IA) have introduced legislation in the Rebuild America Act to raise the minimum wage to $9.80 over three years, providing full-time, year-round workers with a raise of $5,100 annually – nearly 35 percent. After that, the minimum wage would be indexed to inflation to maintain its value – a huge win for workers. This would be especially important to women workers who represent two-thirds of workers earning the federal minimum wage or less, including two-thirds of tipped workers who have a federal minimum cash wage of only $2.13.

So what would $5,100 mean each year for minimum wage workers?

It’s always nice to start the weekend off with a bit of good news. Starting next year, Rhode Island minimum wage workers will get a small raise. Governor Lincoln Chafee has signed a bill that would raise the minimum wage to $7.75 per hour in the state, a 35 cent per hour increase.

As I mentioned previously, this increase falls well short of what is needed, but it’s good to see a state taking a step in the right direction. There are minimum wage bills pending in several other states – New York, New Jersey, Illinois and Massachusetts– that would do much more for minimum wage workers, the majority of whom are women, but Rhode Island is the only state to enact an increase so far this year.  So, thank you to Governor Chafee and the Rhode Island legislature for recognizing that minimum wage workers deserve a raise! Read more »

There’s some positive news on the state minimum wage front. The Rhode Island legislature has passed a bill to raise the minimum wage in the state from $7.40 to $7.75. While 35 cents an hour falls short of the raise that’s needed, as the chairwoman of the House Labor Committee rightly points out, every little bit helps. Read more »

One hundred years ago this week, on June 4, 1912, Massachusetts enacted the first minimum wage law in the United States – the first in a series of similar laws that states passed in the years before the federal minimum wage was established in the Fair Labor Standards Act (FLSA) of 1938. 

In honor of this milestone, I read up on the history of the minimum wage and was struck by how one old adage seems to apply: the more things change, the more they stay the same.  Here are a few facts about the minimum wage in its early days that remain just as true today.   

• The minimum wage is critical issue for women.  That first minimum wage law in Massachusetts set up a commission to determine a minimum wage only for women workers, who were especially vulnerable to exploitation by employers and regularly were paid less than men.  It was the first female Cabinet member – Frances Perkins, the Secretary of Labor under President Franklin D. Roosevelt (and an all-around rock star) who later advocated forcefully for the first federal minimum wage law, often citing the particularly deplorable wages and working conditions faced by women and children.