Start a public administration degree at American Public University. |
By Dr. Stephen Schwalbe
Faculty Member, Public Administration, American Public University
In his 2014 State of the Union address, President Obama called for an increase in the federal minimum wage to $10.10 per hour. He accompanied his request by signing Executive Order 13658, which raised the minimum wage for federal contractors to $10.10 per hour, effective January 2015.
Initiatives to raise the minimum wage are now on state ballots in Massachusetts, Michigan and Missouri for the November 2018 election. Other states may follow suit.
Those people in favor of raising the minimum wage argue that it will mitigate the widening inequality wage gap and will boost consumer spending. Opponents counter that it could reduce opportunities for employment, particularly among teenagers and others looking for entry-level or low-skill jobs.
The economic issue is that these types of jobs usually require low skills. However, most of them do not fit the low-wage stereotype of a teenager with a summer job.
Average Age of Minimum-Wage Workers Has Risen to 35
There are around 2.6 million hourly workers in America (less than 2% of the total) working at or even below the federal minimum wage. In 2015, around 45% of them were between the ages of 16 and 24.
The average age of a minimum-wage worker today is 35. Most of them work full-time and have families to support.
Last Increase in Minimum Wage Was in 2009
The Roosevelt administration passed the Fair Labor Standards Act (FLSA) in 1938. The federal minimum wage was originally set at 25 cents per hour. Congress reviews the minimum wage from time to time and adjusts it by amending the FLSA.
The last raise came in 2009 (almost a decade ago), where the standard was set at $7.25. That means that someone working for that hourly pay for 40 hours a week and 52 weeks a year would earn just $15,080 for the year.
By comparison, the government-defined poverty level for a married couple is only $16,240 per year. Unfortunately, the dollar has lost 12% of its value due to inflation.
Some States and Local Governments Have Their Own Laws for Minimum Wages
Federal law mandates employers pay their workers above the federal minimum wage rate. Twenty-nine states and nearly two dozen city and county governments have established their own laws. For example, Washington State currently has the highest wage at $11.50 per hour.
Washington, DC, currently has the highest minimum wage among cities at $13.25 per hour. Seattle, San Francisco, Los Angeles and New York are gradually increasing their minimum wages to $15 per hour over the next few years.
Congress in Debate about Whether Raising Minimum Wage Will Increase or Decrease Unemployment
The Republican majority in Congress argues that raising the minimum wage through the FLSA will lead to higher unemployment. However, research has been unable to find a correlation between increasing wages and a rise in unemployment. For instance, John Schmitt, writing for the Center for Economic and Policy Research, stated in 2013 that minimum wage increases historically have not led to increasing unemployment.
On the other hand, the Democratic minority in Congress claims that raising the minimum wage would be an overall improvement to the national economy. The Congressional Budget Office concluded that overall real income would rise by $2 billion.
In a noteworthy study published in 2013, David Cooper of the Economic Policy Institute observed that raising the minimum wage to $10.10 per hour would lift about one million Americans out of poverty. In addition, he found that “increasing the national minimum wage from $7.25 to $10.10 per hour by July 1, 2015, would result in a net increase in economic activity of approximately $32.6 billion over the phase-in period and would generate approximately 140,000 new jobs.”
Benefits of Raising Minimum Wages Differs, Depending upon Where You Live
There is a valid concern that raising the national minimum wage is not as effective as raising the minimum at the state level, which is not as effective as raising it at the city level. Living wages are dramatically different between urban and rural areas across the country.
What is a livable wage in Wyoming would cause you to be homeless in New York City. A livable wage in Seattle would allow you to live very well in Montana.
Oregon a Leader in Changing Minimum Wage Levels
The most effective approach to the minimum wage issue in America is to let the states manage it. Oregon is leading the way for the rest of the country. It increased minimum wages across the state beginning July 1, 2018.
However, the raises won’t be the same across the state. Minimum wage in Oregon will eventually increase to:
- $12.00 per hour inside the Portland urban area
- $10.50 per hour in non-urban counties
- $10.75 per hour in other areas of the state
Oregon’s new wage levels were set by Senate Bill 1532 in 2016. Oregon’s minimum wage will increase on July 1 each year through 2022 and beginning in 2023, the wages in all tiers will be adjusted for inflation.
Most Americans Believe Minimum Wage Is Too Low
A sizeable majority of Americans — 72 percent — believe that the current federal minimum wage rate of $7.25 per hour is too low, according to the results of a Harris Poll published on August 13, 2017. It is time to raise the minimum wages across the country, but there should not be a standard wage for the whole country. Instead, each state should approach the issue as Oregon has and raise its minimum wage to the level that works best for it.
About the Author
Dr. Stephen Schwalbe is an associate professor at American Public University. He is also an adjunct professor at Columbia College. Stephen received a Ph.D. in Public Administration and Public Policy from Auburn University in 2006.
Comments are closed.