The debate over a federal minimum wage increase continues to rage in the United States, and is a hot-button issue for some constituencies. This, despite the fact that a visible majority of Democrats and a small, if measurable, majority of Republicans have been shown to support such an increase. Now the states themselves have entered the fray, with 30 states proposing a higher federal minimum wage. These proposals are thought to have different outcomes depending on each state’s politics, with conservative states such as Florida and South Carolina seemingly unlikely to pass such measures, while states such as Massachusetts and New Hampshire, might see the voting going in the other direction.
The landscape of minimum wage already varies wildly depending on the state, as when comparing the state of Washington, with its $9.32 minimum wage, and Arkansas, which has a state-legislated minimum wage that is $1 per hour lower than the federally mandated rate. Twenty-one states already have a minimum wage that exceeds the federal rate in an attempt to meet inflation and the higher cost of living. Adjusting for inflation, the minimum wage in 1968 would come out to $10 per hour today. Meanwhile, minimum wage activists argue, that $1o buys a lot less at the supermarket today than it did in 1968.
Seventy-one percent of Americans support a higher federal minimum wage, though the opposition to such a measure is vocal and determined. “Even if we did raise the minimum wage, working families will still not be able to make ends meet on those jobs,” Gov. Rick Scott of Florida recently said. “We need good jobs that lead to good careers for our families, and that’s what I am focused on.”
Other conservative pundits and lobbyists have stated concerns that raising the federal minimum wage would cause businesses to create fewer jobs in order to make ends meet, in the end hurting an already struggling economy. But proponents of such a measure and those arguing for state minimum wage increases have taken a different view. “Something like 700,000 people in Massachusetts who earn between $8 and $10.50 would get a raise, and there would be a billion dollars that would go back into the economy because people would spend it locally,” says Massachusetts activist Lew Finfer.
The history of the minimum wage in the United States is a checkered one. In 1895, the Supreme Court struck down a measure that would have established minimal work safety laws in the bakeries of New York, saying that governments did not have the right to interfere in the contracts made between businesses and their employees as to pay, hours and conditions. Workplace safety was later taken on in a form that was allowed by the Supreme Court in 1971, with the passing of the Occupational Safety and Health Act.
In the interim, however, President Franklin D. Roosevelt had engaged in several actions to create a minimum wage in order to combat the Great Depression, stating, “If all employers will work together to shorten hours and raise wages, we can put people back to work.” Congress passed Roosevelt’s National Industrial Recovery Act in 1933, and businesses which chose to offer shorter hours and higher wages could display a blue eagle logo in their establishment windows, and were given perks if they did so, incentivizing the system. The Supreme Court struck down the Act shortly thereafter. Roosevelt tried and failed once more in 1936. In 1937, however, a justice reversed his position, and a year later, the Fair Labor Standards Act was passed. The minimum wage debate in the United States had begun.
This early minimum wage was fortified by President Lyndon B. Johnson’s War on Poverty, which included the inception of programs such as the Food Stamp Act and Head Start. These programs add to the current minimum wage debate, as various policymakers and coalitions since argue whether the burden of the deficit between wage earnings and the rising cost of living should fall on employers or taxpayers. Those who argue for a minimum wage hike have asserted that programs such as the Food Stamp Act and government medical programs are growing out of control because businesses are not offering a living wage, thus forcing taxpayers to subsidize corporations so that they may keep their profit margins intact. Opponents of a minimum wage increase argue that the minimum wage was never meant to be a living wage, but rather, an incentive to force the worker on the lowest rung to fight their way up the ladder to a better paying job.
“I believe we have a wage deficit, not a skill deficit,” Economist Lawrence Mishel of the Economic Policy Institute opines. “Low-wage workers are far more educated and productive than they were in 1968, yet their wages are less.” Mishel’s statement highlights the concerns of many left-leaning policy advocates who argue that due to the current job market, jobs with higher earning potential are taken, leaving no room for upward mobility until more jobs are created, and forcing people who earn poverty wages to use them as living wages, regardless of whether that is what the minimum wage was meant for.
The debate is ongoing about whether the landscape of upward mobility is comparable now to what it was in the days of the federal minimum wage’s inception, and whether it costs the United States more to continue to pay out food stamps or to threaten jobs by forcing employers to pay more to keep their employees. The fact remains that businesses often leave the country, outsourcing if possible, or shut down entirely if federal requirements make it too difficult to do business profitably.
But the fact also remains that the current federal minimum wage does not reflect even the modest gains the U.S. economy has made since the 1960s, nor does it reflect inflation, having remained unchanged since July 2009. Previous to this, the longest dry spell for federal minimum wage change was an 11-year period dating to 1997.
Some proponents of a minimum wage increase come from unexpected directions. Ron Unz, former publisher of The American Conservative and deemed a far-right Republican, is sponsoring a California ballot initiative to raise that state’s minimum wage from $8 per hour to $12. Unz defends his initiative as follows: “Right now, $250 billion a year in social welfare spending goes to workers who can’t survive on their paychecks. What we’re talking about is a massive system of hidden government subsidies for these low-wage employers where they can shift the costs of the workforce over to the taxpayer.”
Unz also addresses the concerns of his party regarding whether this increase would actually relieve the overburdened assistance programs on which so many low-wage earners currently depend. “The figures I’ve seen are that probably for every extra $3 or $4 they earn in their paycheck, they’ll lose probably about a dollar worth of government assistance,” Unz projects. “In this case, a $12 minimum wage, if it were nationwide, would boost the incomes of 40 percent of all the wage earners in the United States.” Unz also echoes the sentiments of many of his liberal counterparts with regard to the character of the American worker. “And I think most workers would rather earn their living rather than get it in government handouts or welfare programs.”
There is no telling how 2014 will shape up with regard to the federal minimum wage debate, but it is clear that much of the moving and shaking will be taking place at the state level. As a subject very dear to the voter, a federal increase will likely remain on the radar as midterm elections approach. Arkansas, facing a referendum on their lower than federal minimum wage, also faces a fierce fight for a contested U.S. Senate seat. Democrats in Arkansas have been expressing hopes that the debate will boost their voter turnout. But no matter how much the left may count on the issue to raise support, there is no doubt that there will also be aggressive action to keep the federal minimum wage at its current level.
Randel Johnson, senior vice president of the U.S. Chamber of Commerce, is convinced that the fight is a necessary one. “Employers will react to this either by hiring less people or by reducing benefits and payroll in different ways to adjust to the money they’ve got to pay for this,” he says.
By Kati A. Turner