Saturday, June 13, 2009

A Living Wage

Under legislation passed back in 2007, the federal minimum wage is set to rise for the third and final time to $7.25 an hour only July 24th of this year. Despite conservative bunk that it will hurt, this should actually help stimulate the economy since it will put more money in the hands of low-income people who will immediately go out and spend it (something we desperately need).

But before it started to be raised two years ago, it had been over ten years since the last increase. We should prevent that from ever happening again:
But the result of these political fisticuffs is that the country goes through long periods when the federal minimum wage, which was established during the Great Depression, is allowed to stagnate. That doesn’t help the workers who see their purchasing power diminished over time by inflation. And it really doesn’t help employers who periodically get slapped with big wage increases because politicians decide they finally have to act.

You have to wonder why both sides wouldn’t rather have a stable minimum wage that rises incrementally with inflation — much like Social Security benefits do. But no, political games are more fun.

In real terms, the federal minimum wage has never been higher than it was in 1968. And in 2006, after a decade without any increase at all, its value was barely half as large as it was 38 years before...

In 2008, roughly 2.2 million workers earned no more than the minimum wage, and the vast majority of them were paid less. That amounts to 3 percent of the hourly workforce. Of those, only about 545,000 — a quarter of the total — were teenagers, and half were 25 or older. Two-thirds of minimum wage earners were women; 80 percent of them were white. And about two out of every five workers who were paid the minimum (or less) were employed full time.

So it’s not just kids and it’s not just part-timers who are covered by the federal minimum wage. And it’s also hard to see how a regularly rising minimum wage would break the collective bank.

Moreover, most states seem to have figured out that setting a floor under wages is a valuable thing for their citizens. Currently, 27 states plus the District of Columbia require higher wages than the current federal minimum of $6.55 an hour. Even after the next incremental increase of the federal minimum takes effect, at least 13 states will still require their employers to pay more.

Providing for automatic increased to the minimum wage based on the inflation index simply makes sense since it means our low-income workers won't have to wait the right politicians to be in power at the right time to get basic cost-of-living increases, and it also lets employers know when to expect an increase.

Now President Obama actually proposed during the campaign to increase the minimum wage to $9.50 an hour by 2011 and index it to inflation afterward, so let's hope that comes to fruition and Congress isn't scared of taking action during the recession. This just makes sense and is the right thing to do.

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