While we continue to see the debate over the minimum wage in Washington DC, I really wonder what they are debating about and what is the real concern. It’s annoying that elected officials who earn more than $174,000 of federal money are arguing that raising the minimum wage from $7.25 to $15.00 an hour would increase unemployment. That unemployment and minimum wage debate has been taking place for a couple of decades. Some argue an increase in higher wages will force small businesses to close, especially after the stress of the pandemic. Well, there was no pandemic 12 years ago, and that was the same argument from conservatives in Congress. The economy did ok especially coming out of a recession in 2009, which was the last time the minimum wage was changed.
That wage increase is proposed to take place gradually over a four-year period, reaching $15 an hour by the year 2025. The first increase would go from $7.25 to $9.50 an hour when the law becomes effective. It’s up to Congress to set the effective date. There are 21 states that do not have a minimum wage rate, or their wage rate is below $7.25 an hour.
The minimum wage law was created in 1938. The goal of the 1938 Fair Labor Standards Act-FLSA was to set a wage that people could work and live comfortably. The minimum wage rate at that time was .25 cents an hour. The FLSA was part of President’s Roosevelts New Deal to increase consumer consumption. The belief was paying people more money would increase their spending, and it would also give businesses an incentive to hire more workers. It worked. Mandating higher wages just didn’t improve standards of living for working class citizens; it also improved the economy.
The minimum hourly rate was 1.60 in 1968. The minimum wage reached $5.15 in the late 90s and stayed there for over a decade. Today the minimum is barely above what is classified as poverty level. A person working 40 hours a week and earning the federal minimum wage earns $15,080 a year. The 2021 federal poverty level is $12,880. Congress must be okay with keeping people barely above poverty.
Is raising the minimum wage about economics or attitudes towards the working poor? Some economists continue to debate how the minimum-wage laws reduce poverty, income inequality and/or overall employment. And, some economists argue that raising the minimum wage impacts businesses and those businesses might move to states where the minimum rate is lower. It doesn’t take an economist to make the argument that if there is a minimum wage standard across the country, those businesses might just stay put. Today’s minimum wage has the purchasing power about where it was in the 1980s. Meaning what $150 could buy in 1988, you now need about $339.00 to purchase the same item or items.
A few elected officials voting against the minimum wage live in states with the lowest state wage in the country. Georgia and Wyoming’s minimum wage is $5.15. Both states must comply with the Fair Labor Standards Act that requires workers be paid a minimum wage. The federal minimum wage has been $7.25 since 2009.
Just who are the minimum wage earners? In 2014, Pew Research Center showed 1.53 million people earned minimum wage. Almost 1.8 million earned less than the minimum wage because of special exemptions (tipped employees, full-time students, or disabled). Nearly half of the minimum wage earners are women, fall between the age of 16-24. They work in the food industry, health care support now deemed essential workers, retail or farming. All of which have been crushed if not obliterated by the pandemic.
Maybe, just maybe, this debate will have an end. Hopefully, we will see a continuation of history being made this month during women’s history month, with two of the nation’s strongest women, the female Speaker of the House and the female VPOTUS increasing the federal minimum wage.