September 28, 2022

As feds dither, states and localities raise minimum wage • Sacramento News & Review

But where they don’t, millions of workers are stuck at the record federal floor.

By Mark Kreidler, Capital & Main

This story is produced by the award-winning journalism association Capital & Main and co-published here with permission.

At $7.25 an hour, the value of the federal minimum wage is at its lowest point in 66 years. It’s been 13 years since the last increase – an all-time high. Since the federal Labor Standards Act, establishing the minimum wage, went into effect in 1938, the longest periods of Congressional inaction on raising the wage floor have lasted two decades, from 1981 to 1990, then from 1997 to 2007.

The current cost to workers? Those receiving the federal minimum in 2022 essentially earn 27% less than their counterparts in 2009, when the last increase took effect.

These are the conclusions of a study recently published by the Economic Policy Institute, and they are not likely to be denied any time soon. After the Raise the Wage Act failed in the US Senate last year, experts say there has been no push to update the federal minimum to reflect drastic changes in the economy since 2009.

“It’s really sad, because it’s essentially an abdication of the responsibility of lawmakers to protect workers,” said David Cooper, director of PPE’s Economic Analysis and Research Network.

To make up for federal inaction, state legislatures and local governments have implemented their own wage increases — and the pace of their activity is picking up. The result: a crazy quilt of pay rates across the country.

And even where state and local minimums have been increased, these wage rates remain well below any reasonable estimate of what it really costs to live in specific areas – varying wildly and often erratically, depending on the researchers.

So far this year, 24 states and the District of Columbia have raised minimum wages for workers, from a 22 cent adjustment in Michigan to a $1.50 an hour increase in Virginia. All of these states, plus the District of Columbia, already had minimums above the federal mandate; the closest was Montana, which ended 2021 at $8.75 before rising to $9.20. (You can find PPE’s interactive salary tracker here.)

In contrast, workers in 20 states are still subject to the federal minimum, either because states set their lowest wage rates to coincide with that number or because they have no set minimum, which means that the federal rate prevails. Two states, Georgia and Wyoming, have minimum rates of $5.15 on the books but must pay at least $7.25 an hour under labor standards law.

Some 30 states and DC have set minimum wages at higher levels than required by outdated federal law. “But it’s what’s happening at the grassroots level that’s really remarkable,” Cooper said.

From just one city, San Francisco, enacting its own wage law in 2003, more than 50 localities have now taken matters into their own hands, setting rates above their state minimums. According to the PPE tally, 44 cities or counties raised wages in 2022 alone, the vast majority of them via automatic inflation adjustments.

That activity is so far confined to eight states that already have minimum wages above the federal standard, according to the Pew Research Center. California accounts for three-quarters of the local action, mostly around the Los Angeles and San Francisco areas, with their skyrocketing cost of living.

In contrast, 20 states in which federal law still applies do not allow cities and counties to set their own minimums. That means workers in those states are stuck with the $7.25 figure, which is losing purchasing power every day.

The PPE arrived at its declining estimate of the minimum wage by applying the consumer price index over the years, Cooper said. The index, compiled by the federal Bureau of Labor Statistics, is a measure of the average change over time in the cost of a set of basic goods and services to a US urban consumer. In the 12 months ending June 2022, the CPI rose 9.1%, the largest such increase in more than 40 years.

Since February 1956, the federal minimum wage has had no less value. At that time, the minimum was 75 cents per hour, or $7.19 in June 2022 dollars.

A minimum wage rate is just that. A 2020 analysis by the BLS found that only 247,000 American workers earned exactly $7.25 an hour. Another 865,000 actually earned less than the minimum, probably because their jobs were not on the list of those for which the minimum is mandatory.

One problem, critics say, is that the low, unchanging federal minimum means states can set higher rates and still aren’t close to imposing wages that actually allow their workers to afford basic necessities.

Nearly a third of the American workforce, or about 52 million workers, are paid less than $15 an hour, according to Oxfam, a global organization that pushes for equality reform. This $15 rate has been repeatedly cited by researchers as the minimum workers should earn to secure a basic standard of living. (California’s current minimum wage is $15 and is expected to rise to $15.50 in 2023.) Oxfam researchers analyzed their data before the 2022 state and local increases took effect, though these changes do not affect national numbers in the same way as a pure federal increase. would have.

There are deep racial, gender and ethnic considerations. Most low-wage workers in the United States are people of color and women. Oxfam data indicates that while 26% of white workers earn less than $15 an hour, that figure rises to 46% for Latino workers and 47% for black workers. Among men, 25% earn less than $15; for women it is 40%, affecting some 31 million workers.

“Given that a salary of $15 per hour translates to only $31,200 per year for a full-time 40-hour worker, the results of this research are shocking and unacceptable to any society, let alone of one of the richest countries in the world,” wrote Kaitlyn Henderson, author of the Oxfam report.

About six in 10 Americans support raising the federal minimum to $15, a percentage that has held fairly steady in various polls, but the results are falling sharply across parties. After Sen. Bernie Sanders (I-Vt.) failed in his attempt to attach a $15 federal minimum to last year’s massive COVID relief package, there has been no meaningful movement on the issue. . None are expected soon.

In some states, voters have taken matters into their own hands, pushing wage-raising initiatives toward public referendums in places like Missouri and Florida. But until Congress acts and shifts responsibility to states and localities, the wages of millions of workers nationwide will not provide a pathway to a secure life, researchers say.

“These are the same ideological forces that have prevented the development of many reasonable policies at the federal level,” said EPI’s Cooper. “But the stakes are really high with this one.”

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