Minimum Wage

The federal minimum wage was established in 1938, as part of the Fair Labor Standards Act (FLSA), to ensure that all work would be fairly rewarded and that regular employment would provide a decent quality of life. Congress makes periodic amendments to the FLSA to increase the federal minimum wage; however, since the 1960s, Congress has adjusted the federal minimum wage infrequently, enacting raises that have never been adequate to undo the erosion in the minimum wage’s value caused by inflation. This decline in purchasing power means low-wage workers have to work longer hours just to achieve the standard of living that was considered the bare minimum almost half a century ago. The decline in the value of the minimum wage has contributed to wage stagnation, and is directly responsible for widening inequality between low- and middle-wage workers.

In light of Congressional inaction, many states, cities, and counties have enacted their own higher minimum wages, with EARN groups providing the key research and analysis evaluating proposed minimum wage increases. In doing so, they are taking steps to help workers afford their basic needs, bring them closer to the middle class, and ensure that even the lowest-paid workers in their jurisdictions will benefit from broader improvements in wages and productivity.

As of 2017, the federal minimum wage was worth 25 percent less than it was in 1968.

There are 7 states that have no minimum-wage law or a minimum wage below the federal minimum wage. The federal minimum wage applies in all of these states.

Publications

Restoring the Value of Work

This November, Maine voters will consider a ballot question that would raise the state minimum wage incrementally to $12 an hour by 2020 and gradually increase the subminimum wage for tipped workers until it equals the minimum wage for non-tipped workers by 2026. The Maine Center for Economic Policy analyzed the potential immediate and longterm impacts of this ballot initiative and concludes that raising Maine’s minimum wage will have positive net impacts for workers, businesses, and Maine families.

Confront the ‘parasite economy’ by raising the minimum wage

Every three months, the ADP Research Institute releases its Workforce Vitality Index, a measure of private sector job and wage growth. For the past two quarters, Washington state has led the nation in growing jobs and boosting wages, far outpacing the national average and such states as Texas, Florida, and California.

Why does this matter? Because Washington state has one of the highest minimum wages in the nation at $9.47 an hour. And since April 2015, the city of Seattle has been moving towards a $15 minimum wage, with the current minimum ranging from $10.50 to $13 depending on employer size. As the Workforce Vitality Index shows, businesses in Seattle and Washington state are thriving and generating more employment. Seattle’s restaurant industry — which fought the wage laws fiercely — is continuing to add jobs.

The simple explanation is laid out by Nick Hanauer, a successful entrepreneur and venture capitalist from Washington state, in an insightful article in The American Prospect magazine titled “Confronting the Parasite Economy.” Hanauer argues that paying workers decent wages is good for business and good for the economy as a whole. He writes, “When workers have more money, businesses have more customers. And when businesses have more customers, they create more jobs.” To take the restaurant industry as an example, higher wages lead to more disposable income that workers and their families can spend on eating out in restaurants.

Upstate-Downstate Wage Differentials are Relatively Small in Low-Wage Occupations

In the course of the debate about raising the minimum wage in New York State, it has sometimes been said that since wages are much lower in upstate areas that a phased-in $15 minimum wage is untenable there. However, this argument is made using overall median wage levels that are subject to distortion by the presence of a large number of high-wage jobs in the downstate area. When an upstate-downstate comparison is made using wages on a detailed occupational basis for the low-wage occupations (like retail salespersons, cashiers or stock clerks) that would be affected by a higher minimum wage, the pattern shows a fairly high degree of uniformity in wage levels across New York State.