How minimal can a minimum wage be?

Can we design a society where people working full-time do not live in poverty?

There’s a lot of talk these days about raising the federal minimum wage. Not surprisingly, the vocal pros and cons are split most evenly down party lines. A proposed new federal minimum wage of$10.10 per hour is decried by conservatives (“It’ll kill jobs! Why not make it $100 an hour?”) and liberals (“It’s not enough! We’ll still have to subsidize full-time workers.”) You decide who’s right. Maybe it’s both sides. Maybe it’s neither.

Americans take this issue seriously — because stagnant wages cut across every generation and every region.

A rising tide lifts all boats

The minimum wage that once provided a bare minimum safety net for workers is woefully out of step with inflation. Even the State of Washington, with the U.S.’ highest minimum wage ($9.32), recently saw a major city (SeaTac) mandate a $15 per hour minimum wage for nearly 6000 workers.

SeaTac didn’t vote for this almost unprecedented increase in wages purely out of benevolence. They did it because the current minimum wage is unsustainably low for many adults — certainly ones with families — to live on. Obviously, the situation is worse for other states with even lower wages and higher standards of living, including: Oregon (13th highest cost of living), Vermont (9th), Connecticut (4th), California (6th) and Massachusetts (8th).

Los Angeles is currently considering implementing the highest minimum wage in America. The Los Angeles City Council will soon hear a motion to raise the minimum wage to $15.37 an hour for the city’s hotel workers — almost twice the California minimum of $8 an hour (and the federal minimum of $7.25).

When you have an economy with many millions of full-time workers that cannot fully participate in the economy and, more directly, require significant publicly funded subsidies (your tax dollars) to survive, that economy has failed its citizens.

The death of the American middle class

Hey, America. Do you want a viable middle class? (Yes, you do.) While there are many reasons for the shrinking of the American middle class, stagnant and depressed wages are the topmost problem for working-class Americans trying to live the “American Dream.”

In American politics, both sides of the aisle agree that the American middle class is in danger. Median household income, income growth, and share of the total national income continue to decline for middle class Americans.

According to the 2012 Census data, median household income has declined over the past 13 years. I remember those years, in fact. I remember working pretty hard and struggling to find a viable way to live life, plan for retirement and put money away for my kids’ education. You? To add insult to injury, almost all of the economic growth since the Great Recession that began in 2008 has been captured by the super-rich. Even during times of recovery, the middle and lower classes are left on the outside.

When I was young, I worked for minimum wage and I …

Yeah, hold on there a minute, Pappy. When you earned minimum wage in 1968 (when its real value peaked), the wage held at $1.60 per hour. Today, that same wage would be $21.72 per hour adjusted for inflation and increases in worker productivity. And at the current federal level of $7.25, it is nowhere near that. Even more important is the preponderance of adults earning only minimum wage. The average age of the minimum wage earner is 35, according to the non-partisan Economic Policy Institute.

Here are some staggering statistics they uncovered about minimum wage earners:

• 88 percent of all affected workers are at least 20 years old;
• 35.5 percent are at least 40 years old;
• 56 percent are women;
• 28 percent have children.

The stereotype of minimum wage earners being teenagers living at home making extra pocket money is largely false. Not just Millennials / Gen Y are experiencing historically low buying power. Low wages are depressing the livelihoods of Gen X and Baby Boomers — by the millions.

Won’t raising the minimum wage cost jobs?

The federal minimum wage has not increased since 2009 and has seen little-to-no growth over the past 50 years. The reality is this: the minimum wage has been raised multiple times since 1938. Unfortunately, the current minimum wage is out of step with inflation. To argue that the minimum wage should not be raised under threat of killing jobs ignores how inadequate the minimum wage has become and for whom.

With the past 50 years as an example, clearly the minimum wage issue is intergenerational. Wages have been and continue to be depressed for Gen Y, Gen X and Baby Boomers. According to a 2013 study by the Economic Policy Institute, the current federal minimum wage is worth $2 less than it was in 1968, adjusted for inflation.

Former Secretary of Labor in the Clinton administration and Chancellor’s Professor of Public Policy at the University of California at Berkeley Robert Reich is in favor of raising the minimum wage:

“Raising the minimum wage is good for the country. It puts more money in the pockets of people. Sixty-five percent of Americans want to raise the minimum wage. Most minimum-wage workers these days are not teenagers. They are breadwinners. If you help them, you are helping the economy overall.”

“And a lot of employers will benefit from a higher minimum wage. We know empirical studies show that. This is not a matter of government planning. This is a matter of doing what we have done in this country — in fact, if we had a minimum wage today that was as high as it was in 1968, adjusted for inflation, it would be $10.40 an hour. And if you add in productivity improvements, minimum wage actually would be $15 an hour.”

Fifteen dollars an hour — just like SeaTac, Washington and possibly Los Angeles. A new minimum wage of $10.10 an hour — difficult as it might prove to be for businesses — is starting to look like merely a half-measure. We must lower our expectations for an economic recovery that stretches across all generations and classes. Our youngest Americans have already lowered theirs.

An earlier version of this article was originally posted on WiseTribe. Image by Nuno Morão via Wikimedia Commons.

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