On Tuesday, February 12, 2013, President
Barack Obama, in his State Of The Union Address, introduced a proposal to
increase the national minimum wage and tie it to the cost of living
("Obama’s 2013 State of the Union Address"). Since then, a bill,
cosigned by one hundred thirty–nine members of congress, has been formally
introduced known as the Fair Minimum Wage Act of 2013. If passed, the Fair
Minimum Wage Act of 2013 would increase the current federal minimum wage of
$7.25/hr. to $10.10/hr. over the next two years ("Summary: S.460
[113th]"). Subsequent increases would be based on the annual cost of
living index as determined by the United States Secretary of Labor
("Summary: S.460 [113th]"). The act would provide a raise for around
thirty million American workers, but has been criticized for being potentially
detrimental to the economy (Morton). Regardless of any opposing view, there is
no denying the fact that those working on the federal minimum wage, especially
those with families, are facing undue financial hardship. All in all, the Fair
Minimum Wage Act of 2013 should be enacted because of its potential to help
millions of Americans make ends meet and improve their standard of living.
In the United States, we as citizens
like to think that anyone, no matter where or how they were brought up, can do
anything with enough hard work and determination. This ideal, coined the
“American Dream,” has always been part of our culture, but has not always been
reality for every American. Most would strongly agree that every United States
citizen should have an equal opportunity to achieve this dream. It is
guaranteed in the constitution, after all, that all citizens be treated equally
and would thus have an equal opportunity to succeed. However, we are finding
today, that federal laws do not necessarily facilitate that idea. The current
federal minimum wage is one such federal law that is not providing an
opportunity for low wage workers to grow and achieve the “American Dream.”
Due to inflation, the federal minimum
wage, over the last forty–five years, has been dropping in value. In 1968, the
minimum wage was $1.60/hr. (United States). When corrected for inflation,
however, its actual value, or buying power, was equivalent to $10.70/hr.,
thirty percent higher than the current value (“Facts”). This decrease means
that despite working the same amount of time, low wage workers are actually
making less money than they used to. This pattern, of the deflating minimum
wage, has been on a downward trend since 1968 and is proving to be problematic
for low wage workers. In 1960 for example, a gallon of gasoline cost $0.31
(Konen). Translated into the amount of time someone would need to work at the
minimum wage, it would be nineteen minutes. Today, according the American
Automobile Association, the average price of gasoline is $3.52 per gallon
(Green). With the minimum wage of $7.25/hr., a worker would need to work thirty
minutes, almost double the amount as he or she would have in 1968. People have
to work more to purchase the same amount of goods. This change is posing
serious problems for those who rely on the minimum wage.
Gasoline is one of the many costs of
everyday items taken into account when the Secretary of Labor calculates the
cost of living index, or consumer price index. The purpose of the index is to
determine, and in part measure, the general cost of goods to the average
consumer. It is closely tied to the poverty line, which is the point by which people
are unable, financially, to purchase goods and services considered as usual
commodities for the average American ("2012 HHS Poverty Guidelines").
The value of the cost of living index depends on the location in the country,
but has been consistently increasing over the years due to inflation. Some
goods like gasoline, electricity, and various food products have increased in
price abnormally quick in the last decade (Johnson). The increasing cost of
living is pushing the poverty line up, and is engulfing millions of American
families. Living on low wages is becoming increasingly difficult with the
rising prices of goods and services nationwide. The Fair Minimum Wage Act of
2013 would solve this issue as it would, for the first time since 1938, tie the
minimum wage to the cost of living. If the minimum wage remains untied to the
cost of living, American families relying on income at minimum wage level will
continue to fall into and remain in poverty.
In the words of President Barack Obama,
“in the wealthiest nation on Earth, no one who works full-time should have to
live in poverty” ("Obama’s 2013 State of the Union Address"). This
situation, however, is the reality under the current federal minimum wage. Figure one depicts the poverty line in
relationship with the decreasing value of the minimum wage.
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Figure
1: A graph showing the real value of the minimum wage when compared to two levels
of the poverty line (Hall).
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Today, the federal minimum wage pays
around $15,000 a year with full time employment (Morton). For a household of
two living in the forty–eight contiguous states, that annual pay amounts to
just slightly below the poverty line of $15,825 (Hall). If that couple had one
child they would be nearly $4,000 below. The minimum wage is simply not
providing enough income for families to escape poverty. This is part of the
epidemic of “persistent poverty,” in which people supporting families are
unable, despite working full forty hour weeks, to rise above the poverty line.
The federal minimum wage is simply not providing enough income for people to
have an equal opportunity to succeed and increase their standard of living.
On a similar note, housing has become
nearly impossible to attain for a minimum wage worker. According to the
National Low Income Housing Coalition, there is no state in the United States
where someone making $7.25/hr., at forty hours a week, can afford a two bedroom
apartment (Bravve). To come to this conclusion the, National Low Income Housing
Coalition looked at the fair market rent in every state. They concluded that
the rent was simply unattainable without spending more than thirty percent of
one’s income (Bravve). Some states which
have the highest cost of living in the country, like California, Hawaii, and
New York, require an excess of one hundred twenty hours of work to be able to
afford a two bedroom apartment (Bravve). This is not only bordering impossible,
but can be very problematic for single parents, who already struggle to find
time to watch over children. Today in the United States of America, home of the
“American Dream,” owning a house or much less renting is a remote possibility
for anyone living on minimum wage. The problems with the current system only
continue.
When the times are considered, it is all
the more important that the Fair Minimum Wage Act of 2013 be passed to protect
those who lose their jobs. According to Brad Plumer of the Washington Post, “america’s
middle-class jobs have been decimated since 2007, replaced largely by low-wage
jobs” (Plumer). Millions of jobs were lost in the recession, many of which paid
well and provided for a comfortable living. With little other options, laid off
middle class workers have become a large part of the minimum wage workforce.
Occupations making less than thirteen dollars per hour have increased
fifty–eight percent since the beginning of the recession (Plumer). It is all
the more important to protect this increasing population of workers. John
Warren, a porter at Stop and Shop, was one middle class worker affected by the
economic downturn. After working at a book publishing company for twenty–five
years, and making $30/hr., he was laid off and forced to find another job. It
did not take long for him to realize that the only jobs available were low wage
jobs (Warren). Over the last year, he has been struggling to pay a mortgage and
support a family on the minimum wage (Warren). People like John face losing
everything they have worked for due to an inadequate minimum wage. The current
minimum wage does not provide enough income to sustain a home or a family
living at even a middle class lifestyle. The minimum wage should, at least,
provide enough income for someone to wait out a time to find a better job. It
is simply not right that a life’s worth of hard work be lost to an unfortunate
job loss. However, layoffs are not the only injustices dealt with by low wage
workers.
As mentioned before, the minimum wage
has lost value significantly since the 1960s. This loss is not only the cause
of poverty and inadequate housing, but also of the increasing problem of income
equality. Low wage workers simply do not have the same opportunities to succeed
as those who are fortunate enough to find higher paying jobs. Over the last
four decades, the pay of the top one percent most wealthy Americans has
increased disproportionately to the federal minimum wage (Cooper). According to
the Economic Policy Institute, if the minimum wage kept up with the rate by
which the top one percent was being paid, the value would be $28.34/hr. (Cooper).
The result has been an increase in the gap between the rich and the poor, a
form of inequality which has been linked to decreases in economic growth.
According to economists, Andrew G. Berg and Jonathan D. Ostry,
The
difference between countries that can sustain rapid growth for
many
years or even decades and the many others that see growth
spurts
fade quickly may be the level of inequality. Countries may
find
that improving [income] equality may also improve efficiency,
understood
as more sustainable long-run growth (Berg).
Berg and Ostry’s study of different
countries, with different levels of income inequality, revealed that countries
with better equality were more apt to maintain economic growth. To help close
the income gap and thus improve the economy, it is imperative that the minimum
wage be raised to a fair level. The income gap will only expand if the minimum
wage continues to lose value at the rate that it is now.
It is very often argued that that the
Fair Minimum Wage Act of 2013, or any increase in the minimum wage for that
matter, would be detrimental to the economy and cost jobs. This idea, however,
is not reality. As mentioned earlier, raising the minimum wage would help
benefit the economy by closing the income gap. It would also serve as a natural
economic stimulus by allowing low wage workers to have more disposable income. Experts
believe that the Fair Minimum Wage Act of 2013 would translate into “32 billion
dollars in new economic activity” (Morton). Consumerism, being the driving
force of our economy, relies on spending for growth. A 1994 study by Berkley University also confirmed
that there was no sign of job losses after the minimum wage was increased in
New Jersey (Card). In fact, it is often believed by economists that the amount
of jobs would actually rise due to the increased economic activity brought on
by the increase (Morton). Arguments against a raise in the minimum wage are
typically the result of strong lobbying by companies wishing to maintain the
status quo. The result of the Fair Minimum Wage Act of 2013 would not be job
losses and a failure in the economy.
Another
common argument is that minimum wage workers are just seeking more money for
doing less work. This argument is also grossly inaccurate. Based on data from
the United States Department of Labor Statistics, the overall productivity of
American workers has increased consistently for over half a century. The graph
in figure two demonstrates a critical problem with the minimum wage as it is
tied to overall productivity.
Figure
2: A graph comparing the value of the minimum wage to productivity
levels
as provided by the Department of Labor Statistics (Schmitt).
As can be witnessed in figure two, the
connection between productivity and the value of the minimum wage ended in the
late sixties. Since then, the gap between the two has increased dramatically.
Despite doing more work, the minimum wage has only decreased. Low wage workers,
in supporting a raise in the minimum wage, are simply fighting for what they
deserve. It is only fair that they be paid what they are worth.
The Fair Minimum Wage Act of 2013 has
been introduced with the intentions of fixing the current problems with the
minimum wage, and establishing a system to prevent future injustices caused by
it. The act would help to improve the lives and offer opportunities to low wage
workers, who, after the recession, are one of the most vulnerable groups of
United States citizens. Today, the value of the federal minimum wage is much
less than it was decades ago causing an epidemic of persistent poverty in which
families are unable to afford necessities like housing. The recession has
destroyed the hopes of millions of Americans to climb the ladder to prosperity
as they are unable to truly get ahead, no matter how hard they work. With their
numbers increasing, it is becoming all the more important to address the
problem with the far too low minimum wage. For a better, fairer working
America, the time has come to do what is right and enact the Fair Minimum Wage
Act of 2013. It may be our best option to help preserve the “American Dream,”
for the present and the future.
Works Cited
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