Minimum Wage: Lowest in 50 Years

The Progress Report. Posted June 22, 2006.

The buying power of the federal minimum wage is currently at its lowest level in 51 years. Eighty-three percent of Americans favor an increase in the minimum wage (nearly half "strongly support" it). Yet, the House conservative leadership hasn't allowed a full floor vote on the minimum wage since the last increase went into effect, in 1997.

Yesterday, the House Appropriations Committee voted 34 to 28 against attaching a minimum wage amendment to a key spending bill, thus depriving it of a vote on the House floor. But last week, that same committee had agreed to attach the minimum wage amendment to a separate spending measure that funds the departments of Labor and Health and Human Services. Upon passage of last week's amendment, the House leadership announced it would delay bringing the Labor-Health bill to the floor for a vote, and in the meantime, will undoubtedly undertake efforts to strip the minimum wage provision from the bill. The Senate vote today on an amendment offered by Sen. Ted Kennedy (D-MA) to raise the federal minimum wage, in three gradual installments over two years, from $5.15 to $7.25 an hour.

In the nine years since the federal minimum wage was raised, Congress has voted itself nine pay hikes totaling nearly $35,000 a year, while a full-time minimum wage worker's annual pay has not budged from $10,712. Just a few days ago, House lawmakers cleared the way for a $3,300 pay raise that will increase their salaries to $168,500. "It's the height of hypocrisy," said Kennedy.


Conservatives playing politics

The Senate conservative leadership is rallying opposition to Sen. Kennedy's minimum wage amendment by offering a "poison pill" measure that is meant to deter any debate on the issue. The alternative amendment, sponsored by Sen. Mike Enzi (R-WY), would raise the minimum wage to $6.25, but would couple that raise with unpalatable "reductions in overtime pay and tax cuts for businesses." This isn't the first act of political gamesmanship by the Senate conservatives. Earlier, the Senate leadership, led by Sen. Bill Frist (R-TN), floated the idea of trying to "sink the minimum-wage increase by linking it to an unrelated measure that would make it a crime to transport a minor across state lines to get an abortion."

The House conservative leadership is playing its own brand of politics with the minimum wage amendment. They are using "a cruder legislative technique" -- simply refusing to allow the measure to come to the House floor for a vote. Just a week after voting to pass a minimum wage amendment out of the House Appropriations Committee, five committee members -- Reps. Bill Young (R-FL), Jim Walsh (R-NY), Don Sherwood (R-PA), Mike Simpson (R-ID), and Ray LaHood (R-IL) -- switched their votes yesterday and prevented the same amendment from being passed out of the committee on a separate bill. Two other congressmen -- Reps. Jo Ann Emerson (R-MO) and John Sweeney (R-NY) -- voted for the minimum wage amendment last week but were absent yesterday.


Minority Whip Steny Hoyer, a lead sponsor of the language, said he was confident a wage increase could pass on its own if allowed a floor vote, but Majority Leader John Boehner (R-OH) said he is unlikely to allow it. "There are limits to my willingness to just throw anything out on the floor," he said.

The jobs myth

In the face of a growing movement behind increasing the minimum wage, the Right is in desperation mode and resorting to peddling regurgitated false claims that a raise hurts small businesses and job growth, increases poverty, and only benefits teenagers. In fact, the evidence as demonstrated below points in the other direction. Efforts to raise the minimum wage since 1997 have failed because business groups have opposed the measure and lobbied against it. "A group of more than 20 business organizations are fighting an increase this year, as part of the 'Coalition for Job Opportunities.'" Their members claim that they would have to cut jobs if the federal minimum wage were raised.

In truth, the evidence indicates that small businesses benefit from a higher wage. A report by the Center for American Progress and Policy Matters Ohio found that the "11 states with a minimum wage above the federal minimum of $5.15 per hour had higher rates of small business growth between 1997 and 2003." A recent report from the Wisconsin Department of Workforce Development said last year's increase in that state's hourly rate produced $175 million in additional payroll and a $3 million boost in tax revenue, without creating job loss.

Moreover, the evidence indicates higher wagers will not result in fewer jobs. A 1998 Economic Policy Institute report found that unemployment and poverty rates fell after the 1997 increase in the federal minimum wage, and economists David Card and Alan Krueger noted that increases in the minimum wage in various states in the late 1980s and early 1990s did not result in increased unemployment.


The poverty myth

Another myth now being peddled by the right is a study by David Neumark of the University of California, Irvine, that estimates poverty rates increase between 3 percent and 4 percent for every 10 percent increase in the minimum wage by depressing employment of low-skill workers. But Neumark's claim belies historical evidence. Since President Bush took office, the number of Americans living in poverty has increased by 5.4 million. As Jared Bernstein of the Economic Policy Institute has argued,

The evidence unequivocally supports the view that increases in the minimum wage, by increasing the earnings of low-income workers without diminishing their employment opportunities, have historically helped to lower poverty rates.

The teenager myth

Conservatives have argued against the minimum wage by claiming that it only benefits teenagers. In 2005, about a quarter (26 percent) of minimum wage earners were 16 to 19 years old; nearly half (46 percent) were age 25 or older. A minimum wage increase would help people besides teenagers working their first job. Thirty-five percent of minimum wage workers are their family's sole earner, and 65.5 percent of these workers are women. About three-fourths (76 percent) of minimum wage earners work full-time. Sen. Kennedy writes, "A minimum wage worker, who works full-time, 52 weeks a year, makes $5.15 an hour -- $10,700 a year. That's not even enough to keep a single parent with one child above the poverty line!"


State initiatives

House Speaker Dennis Hastert "said last week that he wanted to hold off on debating minimum wage legislation until possibly after the November elections." While Congress dithers and delays, voters in states such as Arizona, California, Colorado, Missouri, Montana, Nevada, Oklahoma, and Ohio stand ready this November to raise their minimum wages through ballot initiatives. Twenty-one states and the District of Columbia have already enacted minimum wages above the $5.15 federal level. Voters will have the opportunity to send the message to Washington lawmakers that they are out of sync with state legislatures and public opinion.

              

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