“You can’t survive on $7.25!” was the mantra of the thousands of nation wide minimum wage earners as they marched on Wednesday, July 24, 2013 in protests marking the 4th year, to the day, since the minimum wage was last raised. This stagnation in the baseline wage of the US workforce puts President Obama, who stumped on promises of a $9.50/hr minimum wage and pledged $9/hr in his most recent State of the Union, in danger of being the first US president since Ronald Reagan to defer raising the minimum wage for an entire presidency. The minimum wage was last raised from $6.55/hr to $7.25/hr on July 24, 2009 by then President Bush, whose initial raising of the minimum wage in 2007 was the first time it had been adjusted in 10 years. And while standard minimum wage has been adjusted within the past decade, the minimum wage for tipped employees is still $2.13/hr, a number that hasn’t changed since 1991. The failure to amend the minimum wage has become especially pertinent in the environment of ‘post-recession’ America, which is currently experiencing an unemployment rate of 7.8% but more importantly an underemployment rate of 17.3% (Gallup). While the government backed economic ‘recovery’ plan has succeeded in stabilizing GDP, corporate profits, and the unemployment rate, to some degree, little has been done about the increasing loss and replacement of middle-class jobs with overwhelmingly low paying service sector jobs that have employed ~12% of the population since 2011. As more and more Americans become reliant upon this baseline number to survive, it is becoming increasingly clear that this definition of a minimum wage is not a living wage that is capable of ensuring the right to work with dignity, as well as the myriad of other human rights that cannot be guaranteed under these unacceptably low and exploitative wages.
Arguments surrounding the national and global economic externalities of raising the minimum wage ultimately come down to ideological differences surrounding which side of the supply and demand dichotomy takes precedence. Rigorous economic speculation on the part of the Federal Reserve Bank of Chicago has estimated that a rise in the minimum wage to $9/hr would either have a negligible effect on the economy or boost it by 0.3%, while increasing low-income households’ earning power by 7%. Similarly, a study by Arindrajit Dube of the University of Massachusetts Amherst and Michael Reich of the University of California Berkley found that an increase in the minimum wage would not have a harmful effect on employment, a finding substantiated by Britain’s elevation of the minimum wage to 46% the national average, which ultimately had no adverse effect on employment. The fear of a raise in minimum wage placing small businesses in dire straights, with increased operating costs, obfuscates the fact that large companies employ 66% of low-wage workers; in fact, the top employers of minimum wage earners are Walmart, Yum! Brand Foods, McDonalds, Target, Sears, Subway, TJ Maxx, and Burger King. 63% of the 50 top low-income employers have a higher operating margin than they did before the recession, with executive compensation averaging $9.4 million. And while these executives take massive salaries and bonuses, many of their employees are left with government assistance programs like TAMP and SNAP as the only recourse for their families’ survival, putting more cost on woefully underfunded programs and the American taxpayer. And while these minimum wage jobs have historically been viewed as transitory and reserved for supplementary income, statistics from the Economic Policy Institute indicate that 88% of people working minimum wage jobs, who would benefit from an increase, are at least 20 years old, 44% have some sort of college education, 25% are parents, 33.33% are married, and 70% are in families with incomes less than $60,000. These statistics obviously deviate from the common cultural picture of minimum wage workers overwhelmingly being high school students looking for extra income during the summer.
Regardless, or perhaps because, of this horribly incorrect yet pervasive view of low-income earners, minimum wage has dove in real dollars since the 1980s, when it placed a single parent family above the poverty line. In fact, the minimum wage in 1968, which was close to $10/hr in today’s dollars, placed an individual above the poverty line for a family of three. And while President Obama’s proposed increase in hourly minimum wage to $9/hr seems reasonable, it places a family of four, with two full-time minimum wage employed parents, at $23,656/yr, or $165 above the current poverty line. McDonalds and Visa teamed up to show a suggested budget for their minimum wage workers. This budget, based upon 2 full-time minimum wage jobs totaling at 74 hours a week, or $24,720/yr, eschews such luxury spending as heat, food, and gas, which must be included in the $27 allocated for daily spending. Furthermore, this budget assumes a fee of $20/mo for healthcare, a very low rate considering healthcare is not provided by a vast majority of minimum wage employees.
Suppressing the minimum wage does more than simply impoverish and exploit those employed in those jobs. The minimum wage is a baseline that plays a role in setting the market price of labor. Currently 1 in 4 Americans earn under $10/hr, meaning that a rise in the minimum wage will certainly elevate other depressed wages in the US economy (‘rising tides float all boats’ to steal a phrase). Since many of these individuals live from check to check, this added income would be put directly into the economy, a fact reflected in the Economic Policy Institutes’ estimates that increasing the minimum wage to $10/hr, will increase the GDP by $32.6 billion while creating near 140,000 jobs. And while an increase of this degree has been proposed to congress in a bill sponsored by Tom Harkin (D-Iowa) and George Miller (D-Calif.), both congressmen find it unlikely that a bill of this magnitude will be passed. This is incredible considering a Huffpost/yougov poll that shows that 62% of American support raising the minimum wage to at least $9/hr (86% of Democrats, 56% of Independents, and 36% of Republicans). Even as an overwhelming majority, some may even say a supermajority, of Americans support raising the minimum wage, the fact is congress has no interest in even bringing these bills up to vote in their own committees.
Four years have gone by since the minimum wage was adjusted, and there appears to be no motivation in congress to address this growing systemic inequality in pay difference. Taking this discussion only to its esoteric, soft-scientific, ideological-cum-theoretical economic conclusion disguises the human reality of this abysmal paycheck inequality, a contradiction that continues to violate the basic human rights of million of Americans. As the owners and financiers of these major employers of minimum wage employees make millions of dollars in net profit, their employees/producers/laborers are forced to chose between food and heat, childcare and home payments. This is unacceptable and deprives workers of dignity and access to fundamental human rights. This is veritable action through inaction from the congress that only serves to reify the sad and unacceptable reality of ‘the working poor in the United States’.