CHN: Fair Minimum Wage Act: Growing Support to Raise the Minimum Wage
Millions of American workers work hard everyday for wages so low they cannot afford to take care of their families. One of the most disturbing trends of the slow post-recession recovery is the shift in the U. S. economy towards lower-paying jobs. Lagging behind the cost of living for the last decade, the federal minimum wage pays $7.25 per hour or $15,080 per year for a full-time worker. Even more antiquated is the twenty-year-old federal wage for tipped workers, whose base hourly pay before tips is only $2.13.
However, on this past Thursday, President Obama announced his support for the Fair Minimum Wage Act of 2013 (FMWA) legislation introduced by U.S. Senator Tom Harkin (D-IA) and U.S. Representative George Miller (D-CA) to raise the minimum wage to $10.10 per hour from its current $7.25 in three phases of 95 cents each—and then provide annual index cost of living increases. Furthermore, the bill will gradually raise the federal minimum wage for tipped workers to 70 percent of the regular minimum wage.
In addition, it turns out that raising the minimum wage is not only good for workers but is good for business. More than 30 million workers would receive a raise from the FMWA of 2013. A raise for workers means a boost to the economy. It is estimated that workers will receive over $51 billion in additional wages over the phase-in period. According to an analysis by the Economic Policy Institute (EPI), the economy (GDP) would grow by $32.6 billion, resulting in the creation of 140,000 net new jobs over the phase-in period.
Economists recognize a direct correlation between increased wages among low-income workers and job creation. 62 percent of leading economists surveyed agreed that the benefits of raising and indexing the minimum wage outweigh the cost. An increase in income will give workers more money to pay for necessities; in turn, stimulating the demand for goods and services leading employers to hire new staff to keep up with the increased demand.
Also, if you think this raise will only go to minimum wage working teenagers—think again. More than 88 percent of workers are over the age of 20; the median age of low wage workers is 34.9. More workers are in low-wage jobs in today’s economy, with 48 percent of college graduates in fields only requiring high school diplomas. Nearly half of those who would see their pay raised by this proposal are workers of color; 56 percent are women. Raising the tipped minimum wage to 70 percent would raise wages immediately for 1 million women and raise the wage floor for another 4 million women, according to the Restaurant Opportunity Centers United.
When unveiling FMWA, Sen. Harkin (D-IA) stated, “Income inequality is one of the greatest threats to America’s long-term economic vitality, yet we are widening that inequality with wages that subject people to live in poverty…” The below-inflation growth of the minimum wage over the last 30 years has diminished the purchasing power of workers on the bottom of the wage scale and has marginalized women and people of color. In stark contrast, CEO pay has risen 725 percent over the last and 80 percent of all income growth has gone to the richest 1 percent of Americans.
Moreover, even if a minimum wage worker from a single-family household is fortunate enough to work 40 hours a week she will still fall short of the federal poverty threshold and will need to depend on tax credits and safety-net programs to make ends meet. A better wage for workers is a fairer bet that they will have the income needed to support their families.
There is a growing support for raising the minimum wage among the business community. The U.S. Women’s Chamber of Commerce CEO Margot Dorfman noted that raising the minimum wage will help level the playing field for businesses that treat their employees fairly and invest in communities in which they are rooted. Despite the support nationally, Senate Democratic leaders need to secure 60 votes if the minimum wage bill is to be taken up, and hope to increase Senate support for the bill by attaching small business tax breaks to the proposal. Most likely the U.S Senate will vote on a motion to proceed on the bill at the beginning of December.