June 2004
A New Push to Increase the Minimum Wage
On April 29th, Senator Edward Kennedy (D-MA) and Representative George Miller (D-CA) introduced the Fair Minimum Wage Act of 2004 (S. 2370/H.R. 4256). This legislation would raise the federal minimum wage from $5.15 to $7.00 per hour over a two year period and follows many previous attempts by Senator Kennedy and others to pass an increase. The bill currently has 26 co-sponsors, though it remains unlikely that the Senate leadership will allow consideration of it this year. However, Senator Kennedy has announced plans to offer the bill as an amendment to other legislation as soon as possible.
Why Increase the Minimum Wage?
The original goal of the minimum wage, as stated in the 1938 Fair Labor Standards Act, was to reduce “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers” by ensuring that low-income workers received sufficient wages. However, in the past 65 years Congress has only increased the minimum wage 19 times and at irregular intervals, often failing to keep pace with the rising cost of living. The last time the federal minimum wage was increased was seven years ago and because it is not indexed for inflation, its value has declined every year since to its lowest level in 50 years (Economic Policy Institute –EPI). An increase in the minimum wage is long overdue.
The current minimum of $5.15 per hour provides only $10,712 per year in income for a full time (40 hours per week), year round worker – nearly $5,000 below the federal poverty guideline for a family of three.
In contrast, a full-time worker earning the minimum wage back in 1968, when Congress raised the minimum wage more regularly to keep pace with inflation, would have made the equivalent of $15,431 today - 44% more than today's full-time minimum wage worker (EPI).
All the gains of the 1997 increase have eroded because of inflation. According to EPI, in 2004 dollars, the 1995 minimum wage was worth $5.19, compared to current $5.15 minimum wage.
Current legislation to raise the minimum wage to $7.00 per hour would boost the incomes of minimum-wage earners by over $3,800 per year – a 36% increase – and help some 7.4 million workers or 5.9% of the workforce. Contrary to the stereotype of the minimum wage worker as a teenager working at a fast-food restaurant, more than two-thirds of those affected by an increase in the minimum wage are adult workers age 20 and over. In addition, despite claims from opponents of an increase that raising the minimum wage will hurt businesses and cause job losses, studies following previous increases have found no such detrimental effects. Rather, newer economic models suggest that when workers earn higher wages, businesses frequently experience less labor force turnover, lower training costs, and better motivated workers. Moreover, increasing the minimum wage adds to the purchasing power of low-income families who are more likely to spend additional earnings on necessary good and services, putting their increased earnings right back into the economy.
NAC Position
The remuneration of work is not something that can be left to the laws of the marketplace; nor should it be a decision left to the will of the more powerful. It must be determined in accordance with justice and equity; which means that workers must be paid a wage which allows them to live a truly human life and to fulfill their family obligations in a worthy manner.
Mother and Teacher, #71
Following the guidance of Catholic Social teaching, the National Advocacy Center supports the establishment of a living wage – a wage sufficient for a worker to live a life of dignity and support a family above the poverty line. Full-time work should guarantee that a person and his/her family have a decent place to live, adequate nutrition, quality health care and child care, and educational opportunity. A comprehensive study of what a true living wage would look like has been undertaken by Wider Opportunities for Women through its development of regional self-sufficiency standards – the income needed to meet basic needs without subsidies of any kind. At the local level, living wage campaigns have been successful in pushing city and county governments to enact ordinances that require those contracting with the governments to pay a living wage ranging from a low of $6.25 in Milwaukee to a high of $12 in Santa Cruz.
At $5.15 an hour, the current minimum wage falls far short of the living wage standard and an increase is much needed to begin to address the decline in income seen by low-income families over the past several years. According to the Economic Policy Institute, wages for the bottom 10% of wage earners fell by 9.3% between 1979 and 1999 and the decline in the value of the minimum wage contributed significantly to the growth in income equality. Increasing the minimum wage will help begin to reverse this trend and has the potential to lift many families out of poverty.
