Some deets on the minimum wage

You might be familiar with the status of and debate surrounding the federal minimum wage. Here’s a quick refresher in case you’re foggy on the specifics. Part one of two.

The federal minimum wage has been set at $7.25 an hour since 2009 despite big economic gains and rising costs of living over the last decade. Because of this status quo, debate about raising the minimum has only grown louder. Congress has seen a few potentially landmark bills that have yet to be passed; states and local governments have taken it upon themselves to set their own higher minimums.

Understanding the different sides of this debate isn’t as simple as you might expect. I’ll go over some of the more commonly cited pros and cons in a later post. In the meantime, here’s some background on the current state of the wage at different levels of government.

The federal minimum wage

The federal minimum wage was instituted during FDR’s Fair Labor Standards Act, part of the New Deal. It was very low at first, at $0.25 an hour, but it was still groundbreaking for the U.S. (Remember, the period’s cost of living was a fraction of what it is today.)

The Department of Labor offers a lot of info on the changes to the federal wage over time. But the gist is the wage was gradually increased to $3 an hour by the end of the ’70s before more substantial increases, mostly in the 90s and late 2000s.

Of course, it’s not enough just to look at the minimum wage. You have to consider contextual stuff like inflation. When you do, the value of the minimum wage has fluctuated over time rather than simply increase. One of the best representations I’ve seen is this one from CNN below.

Source: CNN.

The graph itself is interactive on the outlet’s site, but I wanted to highlight one particular year: 1968. When comparing the wage itself to the wage adjusted for inflation, the hourly amount was worth the most that year. This piece from CNN uses data from the Department of Labor and Bureau of Labor Statistics. If you’re still unsure of its validity, check out this piece from Pew from 2017 that has similar findings.

State and local minimum wages

Most states have minimum wages higher than the federal one, from $8.56 in Florida to $13.50 in Washington State. Some states have their wage indexed to inflation, meaning it increases as inflation does. The rest have a wage that reflects the federal minimum, either explicitly or because they simply lack their own. The Economic Policy Institute has a map that compares state wages, below. You can fiddle with the data here.

Source: Economic Policy Institute.

A lot of local government have adopted their own higher wages, too. Many are in California, like San Fran’s $15.59 an hour, but there are some elsewhere: Birmingham ($10.10), Albuquerque ($9.35), and both Cook County ($13.00) and Chicago ($13.50).

Municipal and county rates higher than state minimums are meant to reflect their unique needs. Often, when wage increases are discussed in states, these differences are at least considered to address this.

(There’s also been talk of regional minimum wages, though places like the EPI believe it would simply make existing regional inequality more entrenched.)

A living wage

Frequent proposals to increasing any minimum wage involve the concept of a living wage, which is simply an hourly wage a worker needs to meet all of their needs. You might recall the big push for a $15/hour wage (“Fight for $15”) which began around 2012 and has resulted in some big changes over the past few years. Washington, DC, has a minimum set at $15, for example.

Living wages vary by state and locality. For instance, a statewide living wage in California is $14.99 for one person without children, whereas the wage is $20.82 under the same circumstances in San Francisco County. If you’re curious, the Massachusetts Institute of Technology has a living wage calculator that shows you amounts for individuals and families by state, county, and city.

Where things stand now

Last July , the U.S. House of Reps passed the Raise the Wage Act of 2019 (HR 582; vote results can be found here). If enacted, the bill would amend the Fair Labor Standards Act to increase the federal minimum over a seven-year period to $15 an hour.

It would also include tipped and newly hired workers and workers with disabilities in this new standard. Importantly, the Raise the Wage Act would require the Department of Labor to assist employers in making this transition.

Despite being approved in the House, the Senate has yet to take action on it. It’s likely to remain here for as long as Republicans hold a majority. (Their platform doesn’t gel with wage increases, generally.)

Meanwhile, some states and cities went ahead with scheduled wage increases despite the pandemic. Many opted to delay such increases, like Virginia, but labor groups are pushing back given the prevalence of low paying positions within essential services.

The current circumstances unfortunately complicate the issue. They also get to some questions at the heart of it: What does it mean to value workers? Are the choices surrounding the minimum wage really so binary?

The federal minimum wage hasn’t been adjusted in over a decade, and its worth has only dwindled since then. Many state and local governments have addressed this themselves. Still, a federally mandated living wage is some ways off, even when you exclude the effects of the pandemic.


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