A restaurant worker at a “pay strike” demonstration organized by One Fair Wage on May 26, 2021 in Washington, DC
Anna Moneymaker | Getty Images News | Getty Images
The coronavirus crisis has brought new attention to wages and income.
It’s been 12 years since the last federal minimum wage increase, and whether the minimum wage increase will be passed by Congress is still a question.
The federal minimum wage is currently $7.25 per hour. That wage increase was approved by Congress in 2007, which gradually raised it to the current number in 2009.
This is a problem for many workers trying to get by.
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“The minimum wage was at its peak 50 years ago, in 1968,” said economist Lawrence Mitchell, a distinguished fellow at the Economic Policy Institute who tracks minimum wage changes.
He said that even the productivity and efficiency of workers have more than doubled.
“The failure to increase the minimum wage has actually cut pay for the bottom third of the workforce,” Mitchell said.
Earlier this year the fight to raise the federal minimum wage to $15 an hour was unsuccessful.
One reason why: That change was restricted during the so-called reconciliation process. As a result, a push for an increase in the wage rate by some MPs was not included.
Even as some Americans scream for more stimulus checks, others ask: Why can’t we have a higher minimum wage instead?
Congress’s outlook uncertain
“It certainly remains on the agenda of the Democrats,” said Shai Akbas, director of economic policy at the Bipartisan Policy Center, of efforts to raise the minimum wage on Capitol Hill.
However, it does not look like a near-term target, he said.
“It doesn’t look like that will happen in the next several months,” Aqabas said.
One reason is that Democrats are talking about using the reconciliation process to push their next package. As such, a higher federal minimum wage would not qualify for inclusion.
But while the fight for a higher federal minimum wage is dead on Capitol Hill for now, it has ignited consumer demand that is prompting wage hikes, said Ed Mills, Washington policy analyst at Raymond James.
“Democrats didn’t get their minimum wage legislatively, but they made the market position that in many parts of this country, $15 an hour signals trade after the trade window,” Mills said.
“The wage went to $15 an hour faster than it would have been if it had been done legislatively,” Mills said.
Some companies, states move to higher salaries
Some companies made headlines for their hourly wage targets. This includes Bank of America, which has said it plans to raise its minimum wage to $25 an hour by 2025, and retailers such as Amazon and Target, which have promised to pay their employees $15 an hour has done.
Meanwhile, states are taking steps to increase their minimum wage rates. However, none of them currently have an hourly wage of $15, although states such as Florida are slowly working to move towards that by 2026.
Currently, only four states have the minimum wage higher or equal to $12.50 an hour, according to Business for a Fair Minimum Wage, which is campaigning for higher wages. These include California, Massachusetts, New York and Washington.
Meanwhile, 20 states have wages no more than the $7.25 federal minimum wage.
Notably, President Joe Biden has moved to increase the federal minimum wage for federal contractors to $15 an hour.
According to Mitchell, one problem waiting to be addressed is rising inflation.
“Inflation has already caused substantial cuts in the minimum wage,” he said.
One argument against raising the hourly wage rate is that it could adversely affect businesses and employment. But there is little evidence to support those claims, Mitchell said.
“There may be some firms that close, but others also open up,” he said. “One may ask, if a firm can survive only with substandard wages, is it a good outcome?”