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Memo to Congress: The Working Poor Need a Raise

Fed up after watching the minimum wage stagnate at poverty level for nearly a decade, a growing number of states are introducing their own pay raises with cost-of-living adjustments. Congress should follow their lead.
 
 
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Americans are divided about many things, but on at least one issue they stand united: During the past decade, polls have consistently shown that Americans overwhelmingly want Congress to raise the minimum wage. According to a report earlier this year from the Pew Research Center, 83 percent of the American public -- including 72 percent of Republicans and 75 percent of those who earn over $75,000 a year -- favor boosting it to more than $7 an hour. But, since 1997, Congress has refused to act, leaving the minimum wage stuck at $5.15 an hour.

Frustrated by Congress' intransigence, a growing number of states have made an end run around Washington. Before Election Day, 22 states had enacted laws -- by passing ballot measures or by legislative action -- to raise their minimum wages above the federal level.

On November 7, voters in another six states -- Arizona, Colorado, Missouri, Montana, Nevada and Ohio -- approved measures to raise state minimum wage levels by $1 to $1.70 an hour. But in each of these six states, voters took another important step. They agreed to increase the minimum wage each year by indexing it to inflation. Four other states -- Oregon, Florida, Washington and Vermont -- had already approved minimum wage laws that are not only higher than the federal level, but also include annual cost-of-living adjustments (COLAs). Washington State's minimum wage, now $7.63, is the nation's highest.

Nancy Pelosi, who will become Speaker of the House in January, has pledged to hike the federal minimum wage to $7.25 an hour as one of the Democrats' first acts after taking control of the House and Senate. This would give at least 6.6 million low-wage workers a direct pay increase; millions more will have their wages hiked because the floor has been raised.

But with the Democrats now in a stronger position in Congress, many union leaders and community groups want them to push not only to raise the federal minimum wage, but also to include a path-breaking cost of living adjustment, so that inflation doesn't continue to erode its purchasing power.

Since 1997, when Congress last raised the minimum wage, its buying power has declined by 20 percent. The federal minimum wage is now the lowest it's been since 1955 (in inflation-adjusted dollars). The highest during that period was in 1968, when it was worth almost $8 an hour in today's dollars. Progressive Democrats in Congress should up the ante and demand a minimum wage hike to at least the poverty level -- $20,000 a year, or $9.60 an hour -- with a COLA clause, too.

"Periodically adjusting the minimum wage to keep up with inflation just makes common sense," said John J. Sweeney, President of the AFL-CIO, a major proponent of hiking the wage.

"Whenever we have given them the chance, a large majority of voters -- including large numbers of Republican voters -- voted for minimum wage increases with indexing," said Maude Hurd, president of ACORN, the national community organizing group that has played a key role in many of the state-level minimum wage battles. "The President and Congress should follow their lead."

In November 2004, ACORN and several labor groups led a successful battle in Florida to raise the minimum wage by one dollar to $6.15 an hour and to increase it annually based on the consumer price index. There, where Bush beat John Kerry by 381,000 votes, voters favored the minimum wage increase by 3.1 million votes -- or 71.3 percent to 28.7 percent -- despite the opposition of the state's business community and Governor Jeb Bush.

ACORN and its union allies then looked for other key states in this year's races where they could not only win ballot measures to hike the minimum wage with a COLA provision but also target voter mobilization efforts to increase turnout among likely Democrats -- a liberal counterpart to conservative efforts to put anti-gay marriage measures on the ballot.

They identified six states with potentially close Senate, House or gubernatorial races.

In Missouri, Proposition B -- which will increase the state's minimum wage from the current federal base to $6.50 and index it to inflation -- garnered 76 percent of the statewide vote and won a majority in every county. It was supported by all age groups and income levels. Four-fifths of voters earning less than $50,000 supported raising the minimum wage, as did almost three-quarters of those earning over $50,000. In Montana, 73 percent of voters approved an initiative to raise the state minimum wage to $6.15 and require annual cost-of-living increases. The grassroots campaigns to hike the minimum wage increased voter turnout, especially in the cities, and helped Democrats Claire McCaskill and John Tester win close victories in Missouri and Montana, respectively, helping their party to a majority in the U.S. Senate.

After he was elected in 2002, one of Illinois Gov. Rod Blagojevich's first acts was to sign a bill to raise the state minimum wage from the federal level to $6.50. During his successful campaign for re-election this fall, Blagojevich, a Democrat, frequently pledged to hike it again. A week after his victory, he proposed and the state Senate approved an increase to $7.50 an hour with an annual inflation adjustment. This proposal now moves to the state House. If the Illinois House approves Blagojevich's plan, it will be only the second state -- after Vermont -- to raise the minimum wage with a COLA clause through the legislative, rather than ballot measure, route.

In 2004 and 2005, California's Republican Gov. Arnold Schwarzenegger vetoed bills passed by the Democrat-controlled legislature that would have raised the minimum wage by a dollar and included a cost-of-living adjustment. This year the Democrats approved legislation to raise the minimum wage from its current $6.75 an hour to $7.50 in January 2007 and $8 in January 2008 and include an indexing provision. Seeking to attract Democratic voters in his ultimately successful re-election bid, Schwarzenegger agreed in September to sign the bill if its sponsors eliminated the COLA clause.

"We had a choice -- give him an ideal bill that he would veto or get a dollar and a quarter per hour more for our workers," said Assembly Speaker Fabian Núñez, explaining why the Democrats accepted the deal. "We decided to side with doing the right thing for the poor people."

While business groups invariably oppose any proposal to raise the minimum wage, they are particularly adamant against incorporating a COLA provision. But linking increases to inflation is neither a new nor radical idea. Just last month President Bush signed legislation providing COLA to military veterans who receive disability benefits. Many union contracts require employers to give annual wage increases based on the consumer price index. The federal government already has a cost-of-living adjustment (based on the annual increase in consumer prices) for the 48 million seniors who receive Social Security. Indeed, this 1975 provision has kept many seniors from falling into poverty. Since then, seniors don't have to await a special act of Congress to receive a benefit increase; no longer does inflation drain value from their Social Security checks.

Since 1997, the last time they raised the minimum wage, the Republican-controlled Congress has voted to give members cost-of-living pay raises totaling $31,600. Corporations routinely provide their top executives with huge pay and bonus increases that far exceed the inflation rate, even in years when these companies' own profits and stock value decline. In one year alone, for example, the median pay for the CEOs of America's 100 largest companies increased 25 percent to $17.9 million in 2005.

What about the working poor?

Labor unions, anti-poverty community organizations and faith-based groups will be pushing Pelosi and her Democratic colleagues to take up the COLA cause when they take power in January. Shouldn't workers at the bottom end of the American economy -- who spend almost all of their hard-earned wages on basic necessities -- get an annual raise to help them keep up with the steadily rising cost of housing, food, gasoline, clothing and health care?

Peter Dreier, professor of politics at Occidental College, is coauthor of "The Next Los Angeles: The Struggle for a Livable City" and "Place Matters: Metropolitics for the 21st Century."

 
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