The Campaign to Increase the Federal Minimum Wage Gets Legs

The US Department of Labor is gearing up its campaign to increase the federal minimum wage.  In his recent State of the Union Address, President Obama announced that increasing the minimum wage, which is currently $7.25 per hour, was one of his policy objectives.  Last week, on the Department of Labor’s web-based internet newsletter, the President’s objective was kicked into action via two postings. 

One posting was entitled “Minimum Wage Myth Buster.”  Here’s what it said:

Myth: Small business owners can’t afford to pay their workers more, and therefore don’t support an increase in the minimum wage.

 

Not true: A recent survey conducted for the Small Business Majority found that more than two-thirds of small business owners support increasing the current federal minimum wage, and adjusting it yearly to keep pace with inflation as President Obama has proposed. The survey also found that 85 percent of the poll respondents already pay all of their workers more than the current federal minimum wage.

 The study referenced was sponsored by the Small Business Majority, a small business advocacy group.  Five hundred small businesses were surveyed via an internet poll.  Whether this is scientifically sound, or not, may be an issue.  Nonetheless, the theme of the findings are significant for the campaign.  First, they say that 67% of small businesses favor increasing the federal minimum wage, and that only 15% of the businesses have any employees earning that wage.  The question on this point was: “Do you favor or oppose increasing the federal minimum wage, up from $7.25 currently, and adjusting it annually after that increase is enacted to keep pace with the cost of living?”  It would have been interesting to see how businesses would have responded to the question if it only regarded the option to increase the minimum wage but left out the indexing to the CPI issue.  By asking it as they did, it’s unclear as to whether businesses truly favor both components of the question.  Second, they say that small businesses (65%) believe that a minimum wage increase will result in more disposable income for low wage earners, and thereby result in more spending by them, which in turn will generate sales and economic growth.

 The second item in the newsletter was a diary of recent travels of Acting Secretary of Labor Seth Harris, entitled “Giving a Hand Up to Minimum Wage Workers.”   The opening paragraph sums up the theme of the campaign:

 Since President Obama’s State of the Union address in February, I’ve traveled across the country meeting workers trying to survive while earning at or near the minimum wage.  Everywhere I’ve gone their stories have been similarly poignant and powerful – hardworking Americans forced to decide which bill to pay, which meal to skp or which relative to borrow money from that month.  Every time I hear a worker share his or her story, I’m more convinced than ever that the president’s proposal to raise the national minimum wage to $9 (and index it to inflation thereafter) is the right thing to do – not just morally, but economically as well.

He then details a number of specific stories of workers he met, many of whom were homeless or based in shelters.  No doubt these are individuals who are prepared to work hard and wish to earn to more.  What’s unclear is whether these workers were typical of those paid minimum wages.

To further feed this campaign, four bills have already been introduced in Congress this session to increase the mimimum wage.  Some of these bills have been introduced during prior sessions, but the volume of bills just on this issue and so early in the session is somewhat unique.  The bills are as follows:

  • The “Original Living American Wage Act” – a/k/a the “LAW Act” (HR 229), which has been introduced in each session of recent vintage, seeks to adjust the federal minimum wage every four years to be equal to “the minimum hourly wage sufficient for a person working for . . . 40 hours per week, 52 weeks per year, to earn an annual income in an amount that is 15 percent higher than the Federal poverty threshold for a family of 2, with one child under the age of 18, and living in the 48 contiguous States, as published for each such year by the Census Bureau.” 
  • The “Working for Adequate Gains for Employment in Services Act” – a/k/a the “WAGES Act” (HR 650), would amend the Fair Labor Standards Act to establish a base minimum wage for tipped employees of at least: (1) $3.75 an hour beginning 90 days after the Act’s enactment; (2) $5.00 an hour one year thereafter; and (3) for every year thereafter, to be the greater of 70% of the minimum wage and $5.50 an hour.
  • The “Fair Minimum Wage Act” (S 460 and HR 1010) seeks to amend the FLSA to increase the federal minimum wage to $8.20 in three months, to $9.15 one year later, to $10.10 two years later, and based on increases to the CPI each year thereafter.  Also, the minimum wage for tipped employees would increase to $3.00 per hour, and thereafter 70% of the federal minimum wage.
  • The “Catching-Up to 1968 Act of 2013” (HR 1346) would increase the federal minimum wage to $10.50 per hour, and thereafter be indexed to the CPI.  The minimum wage for tipped employees would also be pegged to be 70% of the federal minimum wage.  The bill would also repeal the domestic service employment/companionship employee exemptions for overtime under the FLSA.

 It is far from clear whether Congress will tackle this issue or whether this is fodder for the next election cycle.  Time will tell, but it is important to know that this initiative is no longer simmering among a few; it is now a clear talking and policy point of the Administration.

 It is also important to recognize that 19 states and the District of Columbia have minimum wages in excess of the federal minimum wage (but less than the wages proposed in the bills pending before Congress).  For a summary of each state’s wage and hour laws, see the WDHI’s State-by-State Wage and Hour Summary.

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