by Mike Hall, Jul 24, 2008,
Some 13 million low-wage U.S. workers got a pay raise today when the federal minimum wage rose from $5.85 to $6.55 an hour.
The pay hike was the second step of the three-step minimum wage increase Congress passed last year, the first such increase since 1997. The third step, to $7.25 an hour, comes a year from today.
For a decade, Republicans congressional leaders and the Bush administration blocked every effort to raise the $5.15 an hour rate for the nation’s lowest-paid workers. But new Democratic majorities in the House and Senate after the 2006 elections made passage possible.
Today’s increase couldn’t come at more opportune time as families struggle with soaring gasoline and food prices and growing inflation. Says AFL-CIO President John Sweeney:
Raising inflation—especially in gas prices—continues to eat away at the value of the minimum wage and of all wages. Before the Fair Minimum Wage Act passed in May of 2007, the real value of the minimum wage had dropped to its lowest level in 51 years.
Sen. Obama supports indexing the minimum wage to inflation so that it once again becomes a living wage. His position stands in sharp contrast to Sen. John McCain, who has repeatedly voted against legislation to increase the minimum wage, and whose economic agenda is in lockstep with the old failed policies of President Bush.
The Economic Policy Institute (EPI) says that even with the added $1.40 an hour since last year, the minimum wage remains far below the levels that prevailed in the late 1950s through the mid-1980. EPI’s updated Minimum Wage Issue Guide points out that:
- The inflation-adjusted value of the minimum wage is 19 percent lower in 2008 than it was in 1979.
- Since September 1997, the cost of living has risen 32 percent while the minimum wage, even after the increase to $6.55, has fallen in real value.
- Wage inequality has been increasing, in part because of the declining real value of the minimum wage. Today, the minimum wage is 37 percent of the average hourly wage of America’s workers, well below the ratio of the 1950s, 1960s and 1970s.
Rep. Phil Hare (D-Ill.), a former local union president with UNITE, says today’s wage increase will help families
…make ends meet, [but] we need to go even further by indexing the minimum wage for inflation in the future. No one who works full time should live in poverty.
While the minimum wage increase was bottled up in Congress for 10 years, many states acted on their own to raise the wage floor.
In 2006, the AFL-CIO launched the America Needs a Raise campaign to take the wage fight to the states. Working with the community group ACORN, activists mobilized to win ballot initiatives to raise the minimum wage in six states that fall. The minimum wage mobilization also won raises via legislation in 13 states since 2006.
Today, 23 states and the District of Columbia have a higher minimum wage than the federal rate. In addition, 10 states protect its value by indexing it to inflation.
Business groups have long fought against the minimum wage, using the phony argument that it would force employers to lay off workers. EPI reports that studies show raising the minimum wage on the federal or state level “has no measurable negative impact on employment.”
Just last week, at a conference at the University of California’s Berkley Institute for Research and on Labor and Employment, economists reported that minimum wage increases do not reduce jobs and may benefit employers by decreasing turnover and recruiting costs and increasing productivity as workers stay on the job longer.
Much more needs to be done, says Sweeney, to restore economic security for working families:
To truly aid working families, we need to build an economy that works for all, not just the top 10 percent. We must develop a fair and sensible trade policy, invest in our nation’s infrastructure and clean energy, protect retirement security and provide secure, high-quality health care for all.
Last year’s congressional fight to raise the minimum wage even included a Republican-led effort that in effect would have repealed the federal minimum wage. John McCain was one of 28 Republican senators who voted for the measure. For a look back, click here, here and here.