Boosts to local minimum wages are no excuse for federal inaction

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Millions of working people got a raise on Jan. 1 as the minimum wage went up in 19 states and nearly two dozen cities.

Some workers’ wages increased by a few cents an hour — the result of automatic annual adjustments in their state’s minimum wage — while other workers saw increases of as much as $2 an hour, as victories in legislatures and at the ballot box came into effect.

{mosads}Those affected by the changes who work a full year will see their annual pay go up between $90 and $1,300, on average, depending on the size of the minimum wage change in their state.

State and local minimum wages are a critical way to boost incomes for working people. But make no mistake: Good news at the state and local level is no excuse for federal inaction. Even as millions of workers see their wages go up, millions more in the 21 states that still use the federal $7.25 minimum wage haven’t gotten a raise in a decade.

After decades of research, most economists agree moderate increases in minimum wages do exactly what they’re supposed to do — put more money in workers’ pockets with little to no drag on employment.

Recently, more sophisticated research has helped us better understand the impact of the minimum wage on low-wage workers’ welfare. Higher minimum wages have led to clear improvements in the annual incomes of low-wage workers and their families.

As advocates and lawmakers push for higher pay, workers’ overall well-being should be the metric by which we judge new proposals. Even if a higher minimum wage did slow the rate of job growth, or — a more likely scenario— led to a small reduction in workers’ hours, that wouldn’t mean anyone was necessarily worse off.

Some workers may end up working fewer hours, but because their hourly wage would be higher, their take home pay at the end of the year could easily be the same, if not greater than before.

In fact, that seems to be what what’s happening in Seattle, which has a booming economy and the highest minimum wage in the country.

The authors of a much-hyped study from the University of Washington, which purported to show that workers were worse off under the city’s higher minimum wage, actually reversed course with the latest update to their analysis, arriving at the very scenario outlined above.

They found most low-wage workers in Seattle were clearly receiving higher take-home pay, while a small subset were making the same amount of money while working fewer hours — a fairly obvious net gain for those employees.

When the federal minimum wage was first established in the 1930s, it was intended to provide most workers enough pay to afford their basic needs. But it has been raised so infrequently and inadequately over time that there is an enormous gap between where it is today and where it would need to be to become a true living wage.

The Economic Policy Institute’s Family Budget Calculator measures the income a family needs to attain a modest yet secure standard of living in every jurisdiction in the country — and it shows that there is nowhere in the country where even a single adult without children earns enough working full time at the minimum wage to meet the family budget. Even $15 an hour is not enough for working families in many parts of the country.

This year marks 10 years since the federal minimum wage was last raised. Since then, it has lost over 12 percent of its value to inflation.

Many cities and states have stepped in to pick up the slack, but millions of workers are being left behind. We need bold action at the federal level to make up for years of Congress ignoring the needs of low-wage workers.

David Cooper is a senior economic analyst and deputy director of the Economic Analysis and Research Network (EARN) for the Economic Policy Institute. 

Tags Business economy Labour law Law Living wage Minimum wage Minimum wage in the United States Socialism Wage Wages and salaries

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