The majority of minimum wage earners work for big, profitable companies. Those workers are seeing the value of their paychecks diminish and their cost of living increase as workers’ productivity has grown and the corporations they work for are posting record-breaking profits.  Senator Tom Harkin (D-IA) and Representative George Miller (R-CA) have introduced legislation that begins to address this growing disparity.  The Fair Minimum Wage Act of 2013 (S. 460/H.R. 1010) would gradually raise the current federal minimum wage of $7.25 an hour to $10.10 in 95 cent installments over three years.  Thereafter the wage would receive automatic increases linked to changes in the cost of living.  The $2.13 an hour minimum wage for tipped workers hasn’t been increased for over 20 years.  The bill would gradually increase it to 70 percent of the regular minimum wage.
Rep. Miller seized an opportunity on March 15 to demand a vote on the minimum wage increase in an attempt to derail a bill to revamp federal job training programs (H.R. 803; see article elsewhere in this issue).  He offered a motion that would have added the three-year increase to $10.10 to the job training bill.  The motion was defeated 184-233, with no Republicans favoring it and 6 Democrats joining 227 Republicans to oppose.

According to an analysis by the Economic Policy Institute more than 30 million workers would receive a raise from the bill. Contrary to popular belief, 88 percent of minimum wage workers are adults over age 20, not teens, and the majority of them, 56 percent, are women.  Many of these women are caring for children or the elderly, are cleaning offices, or preparing and serving food while struggling to feed and support their own families. Since 2002 the child poverty rate has increased from 16 to 22 percent.  Parents of 17.5 million children are minimum wage workers. Nearly half are workers of color and over 43 percent have some college education.

A National Employment Law Project report documents that 66 percent of low-wage workers are employed by large corporations with over 100 workers.  The three companies that employ the most low-wage workers are Wal-Mart, Yum! Brands (Taco Bell, Pizza Hut, KFC), and McDonald’s.  The vast majority (92%) of the largest 50 employers of low-wage workers have fully recovered from the recession and were profitable in 2011.  Their top executive averaged $9.4 million in compensation in 2011, and their shareholders received $174.8 billion in dividends or share buybacks between 2007 and 2011.

The minimum wage has lost more than 30 percent of its buying power since its peak in 1968.  If the wage had kept pace with inflation its value today would be approximately $10.56.  The minimum wage today pays only $15,000 per year, $3, 000 below the poverty level for a family of three.  Numerous rigorous studies over the past 20 years have shown that increasing the minimum wage does not cost jobs.  Instead, increasing the minimum wage provides an economic benefit for local businesses and communities, generating new jobs as it puts more money into the pockets of low-wage workers who will spend it.  Nineteen states and numerous cities have minimum wages that are higher than the federal minimum wage.

Some would argue that a more effective way to assist low-wage families is through the Earned Income Tax Credit (EITC).  The EITC provides a tax refund to working families with children (and a small credit to some childless workers).  It supplements the income of low-wage earners and effectively raises some families out of poverty.  However, no alternative proposal to increase the EITC has emerged, either this year or when previous minimum wage increases were considered.  Some in Congress who are likely to oppose an increase in the federal minimum wage also pushed back against extending improvements to the EITC in the January 1, 2013 American Taxpayer Relief Act of 2012.  Advocates know that what is required in fairness to families working hard and still struggling to make ends meet is a ‘both/and’ strategy that includes an increase in the minimum wage and a robust EITC.

As in the past, Democrats acknowledge that they may need to agree to tax incentives for small businesses in order to obtain enough bipartisan support to enact an increase in the federal minimum wage.

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