As Republicans celebrate the anniversary of eight years in a row without a minimum wage increase this September, it is increasingly clear that the lowest paid workers in the US need a raise. The poverty and inequality exposed by the Katrina disaster proves this more than ever before. Because low wages are a primary cause of poverty, it is time to raise the federal minimum wage.
Republicans and the right-wing spin machine, which hate any social policy that aids working families, have fought increasing the minimum wage as long as it has existed. They say that raising the minimum wage causes job losses and hurts rather than helps the poor, insisting incorrectly that teenagers would benefit most, not working families. In the face of a huge stockpile of evidence about a raise’s benefit to workers and small businesses across the board, right-wingers continue to distort reality.
What are the facts about the minimum wage?
A raise in the minimum wage to $7.25 per hour would immediately benefit 7.3 million current minimum wage earners. And an additional 8.2 million workers who make about $1.00 more than minimum wage would also see a pay increase. All told, about 15.5 million workers (12.3 percent of the workforce) would see a pay increase.
According to an analysis of government data provided by the non-partisan think tank, the Economic Policy Institute, the largest group of workers who would benefit from a rise in the minimum wage to $7.25 contribute more than half of the earnings of the households in which they live. The earnings of the average minimum wage worker provide more than half (54 percent) of his or her family’s weekly earnings, according to data from the last federal minimum wage increase (more than 8 years ago).
Contrary to right-wing distortions of this issue, adults make up the largest share of workers who would benefit from a minimum wage increase. Nearly three-quarters of workers whose wages would be raised by a minimum wage increase to $7.25 are adults over 20 (not forgetting that some "teenagers" are also adults with adult responsibilities).
A raise would benefit certain populations disproportionately affected by poverty and low-wage work. An estimated 760,000 single mothers and approximately 1.8 million parents with children under 18 would benefit from such a raise in the minimum wage. About 44 percent are full-time workers and more than another one-third work more than 20 hours per week.
Over 60 percent of workers who would benefit from a minimum wage increase to $7.25 are women, and 35 percent are Black or Latino. Over 38 percent of the additional income from such a rise in the minimum wage would go to the bottom 20 percent of income earners, and 58 percent would go to families with working adults who earn in the bottom 40 percent.
Right-wing ideologues also won’t admit that a raise would help fight growing poverty and reverse a long trend of declining wages. As EPI reports, between 1979 and 1989, the minimum wage lost 31 percent of its real value. By contrast, between 1989 and 1997 (the year of the last increase), the minimum wage was raised four times and recovered about one-third of the value it had lost in the 1980s.
But since the last raise, inflation has completely eroded whatever gains were made. The minimum wage in real dollars has fallen to 32 percent of the average hourly wage of all US workers. The current minimum wage of $5.15 buys as much today as what $4.23 bought in 1995, lower than the $4.25 minimum at the time.
Republicans and their mouthpieces can’t have it both ways. They fought to cut welfare and social safety net protections for poor people (a battle that former President Clinton too easily caved in on) and are now demanding that those people go out and work low-wage jobs permanently. Because the minimum wage at full time for most families puts them under the poverty level, the Republican policy is actually designed to keep people in poverty, and nationally has aided a growth of the poverty rate over the last five years. It is Republican doctrine that hurts poor working families.
By contrast, when the state of Oregon raised its minimum wage to $7.23 in 1999, about half of workers kicked off the welfare rolls by the so-called 1996 reform got a pay raise. In general, data shows that families living above the poverty line would also benefit on a wide scale.
Further still, contrary to right-wing assertions, evidence shows that minimum wage increases do not cause job losses. A 1998 study by EPI reveals that after the 1997 increase, the low-wage labor market performed better than it had in decades with lower unemployment rates, higher average hourly wages and family income, and decreased poverty rates. Unfortunately, by failing to keep the minimum wage tied to inflation rates, those gains have since been wiped out.
A recent study of the employment picture in New Jersey after its minimum wage increase in 1992 shows that the raise had no negative effect on unemployment in that state. In fact, a study commissioned by opponents of minimum wage increases of the New Jersey situation was forced to conclude the same thing.
More recent studies of state minimum wage increases by the Fiscal Policy Institute found no evidence of negative employment effects on small businesses. Evidence suggests that higher wages promote higher productivity, reduce recruiting and training costs, decrease absenteeism, and increase worker morale in small businesses. All of these cost-saving benefits to employers can easily allow them to absorb additional costs caused by a higher minimum wage.
Hundreds of prominent economists, including Nobel laureates and other leaders in their field, have actively called for a raise of about $1 to $2 in the federal minimum wage, citing the need to fight poverty and improve the lives of low-wage workers. In this regard, they share the opinion of the overwhelming majority of Americans. Eight of ten Americans, according to the Pew Research Center, agree that the minimum wage should be increased; only 6 percent oppose the idea.
The most recent referendum on a minimum wage increase was held in 2004 in Florida. While Florida voters gave a slim majority to George W. Bush, they agreed to a raise in the minimum wage by close to a fifty-point margin.
Other critics of the right wing’s anti-minimum-wage doctrine have insisted that a much higher minimum is necessary to fight poverty. In their 2002 book, Raise the Floor, economic analysts Holly Sklar, Laryssa Mykyta and Susan Wefald argue that a double-digit minimum wage is closer to what is needed to eradicate poverty completely and to allow families on the lower end of income distribution to enjoy a modest but decent standard of living.
On a very basic level, poverty and inequality in New Orleans and other cities along the Gulf Coast caused the extent of the loss of life, estimated to be in the thousands, a situation which was exponentially worsened by the failure of the Bush administration to act quickly and resolutely to keep people safe. A similar infestation of poverty and low wages is lurking in many other cities and rural areas, waiting to feed on a similar event and create a massive catastrophe.
We can do something now to prevent this. We can fix our disaster preparedness. But we can also resolve to fight poverty by taking on systematic low wages. Let’s fight to raise the minimum wage. This is an emergency.