The Perils of $7.25

(Photo: AP/Mike Groll)

A man listens to a speaker during a rally to raise the minimum wage outside a McDonald's restaurant at the Empire State Plaza concourse in Albany, N.Y in May 2014. 

On July 24, 2009 the federal minimum wage was increased from $6.55 to $7.25 an hour, the third and final increment of a bipartisan-backed law passed in 2007. In the eight years since, the United States’ wage floor has remained stuck at that level, the prospects of an increase stymied by congressional inaction and hostile corporate influence.

For decades, the federal minimum wage was a rather effective tool for ensuring that workers could earn enough to support a family. Now, its power has been all but eroded.  

At the minimum’s peak value in 1968, a full-time minimum-wage worker earned about $19,500 in today’s dollars, enough to keep a family of three above the poverty line. Through the early 1980s, the minimum wage remained strong enough to keep a family of two out of poverty.

Since then, the minimum wage’s value gradually fell even as worker productivity levels have continued to rise. Workers haven’t shared in these gains as shareholders and executives have siphoned off nearly all the increases in revenue. Currently the average American CEO makes 271 times more than the average worker. 

Today, a full-time job at the federal minimum wage pays only about $15,000 a year, which is well below the poverty line for a family of two or more. There’s not a single state in the country where that is enough to afford a two-bedroom apartment. So minimum-wage workers often must work two, three, or even more jobs—and even then, many must rely on public assistance programs to put food on the table and a roof over their head.

In the eight years since Congress last raised the minimum wage, increases in the cost of living—though themselves at record lows—have gradually corroded the value of an hour’s worth of minimum pay. Since 2009, the minimum wage’s purchasing power has fallen by 12.5 percent, according to a report by the Economic Policy Institute. 

(Economic Policy Institute)

The Fight for 15 movement has highlighted the consequences of a languishing minimum wage and sparked a rash of local and state increases. Since 2014, 21 states and Washington, D.C., have raised their minimum wage, as have dozens of municipalities. As the Economic Policy Institute’s Minimum Wage Tracker shows, 29 states and Washington, D.C., have minimum wages higher than the federal mandate, including 18 that have automatic inflation-based triggers.

At the national level, the Democratic Party has also adjusted its minimum-wage policy, albeit more slowly. During his 2008 presidential bid, Barack Obama advocated for a federal increase to $9.50 an hour by 2011, which then was a fairly radical proposition. By the beginning of his second term in 2013, he called for a $9-an-hour minimum wage, which congressional Democrats increased to a slightly more ambitious $10.10. With a Republican-controlled House, however, this was mostly an exercise in political messaging. By 2015, congressional Democrats were officially calling for $12 an hour, while more progressive members voiced support for a $15 federal minimum wage. That was a dividing line in the Democratic presidential primary between Hillary Clinton, who backed $12 an hour, and Bernie Sanders, who supported $15.

Today, in the political wilderness, Democrats in Congress have made a $15 minimum wage the cornerstone of their economic agenda. For now, that simply means that the two political parties are more polarized than ever on the federal minimum wage. While the odd Republican or two has quietly come out in favor of a modest increase to the federal minimum wage, Republican leadership has unilaterally kept any minimum-wage legislation from even being debated.

John Boehner once said back in 1996, “I’ll commit suicide before I vote on a clean minimum-wage bill.” That existential opposition has hardly softened during Boehner's speakership. Nor has it softened under the leadership of Paul Ryan, who consistently trots out his softer, though equally pernicious, talking points about how minimum-wage jobs are meant as entry-level steps for teenagers—like his first job at McDonald’s in the mid-1980s—on their way to higher-paying jobs, and are not meant for those who need to support families (though the vast majority of minimum-wage workers are, in fact, not teenagers).

Republican hostility to minimum-wage increases of any size are seen most vividly in the states where the GOP is in full control and uses its power to wage a war on minimum wages. As of now, 27 states have laws that preempt cities and counties from instituting minimum wages higher than the state’s. After the majority-black city of Birmingham instituted a $10.10-an-hour minimum wage in 2015, Alabama’s majority-white (and majority Republican) legislature quickly passed a law banning local minimum-wage hikes, thereby forbidding the struggling black workers in the state’s largest city from getting a raise.

More recently, in early June the GOP-controlled Missouri legislature passed legislation that would undo St. Louis’s new $10 minimum wage. Republican Governor Eric Greitens said he’d allow the bill to become law without his signature—almost literally taking money out of St. Louis minimum-wage workers’ pockets.

Even while most states have raised their respective minimum wages beyond the federal threshold, 21 states still adhere to $7.25 an hour. Thirty-six states still have minimums of $9 an hour or lower.

A federal minimum-wage increase is the clearest and most effective way to raise pay for millions of low-wage workers. As a recent EPI report states, a $15 federal minimum wage by 2024 would restore its lost value and by 2019 would be worth more than the historic inflation-adjusted high point of 1968. An estimated 22.5 million workers would see an increase in pay.

Unfortunately, the current road to restoring the power of the federal minimum wage is blocked by the Republican Party’s trickle-down doctrine, which has effectively entrenched faux economic arguments about job loss, automation, and market downturns in the national minimum-wage debate, giving cover for the fact that its business benefactors simply don’t want to pay a fair wage for labor.

Meanwhile, minimum-wage workers in 2017 struggle to keep their heads above water at $7.25 an hour—just as they have for the past eight years. 


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