Moving Toward a 'Living Wage'

A Debate Over Minimum Wage That Exists Below the Poverty Line

President’s Order: Barack Obama signs an executive order to raise the minimum wage for federal contractors from $7.25 to $10.10 during an East Room event on February 12.
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President’s Order: Barack Obama signs an executive order to raise the minimum wage for federal contractors from $7.25 to $10.10 during an East Room event on February 12.

By Leonard Fein

Published February 22, 2014.
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There’s an active debate in America regarding the minimum wage. By and large, with President Obama’s endorsement and substantial public agreement, there’s widespread support for a bump upward, from the current national minimum of $7.25 and hour to $10.10 an hour. That sounds like a hefty hike, but it is actually about as stingy as can be.

Here’s why: If the minimum wage were pegged to labor productivity. it would (in 2013 dollars) be $18.28 an hour. If it were pegged to the average wage of production workers, it would be $10.63. And we are debating whether it should go from the current $7.25 to $10.10? That is not merely stingy; it is shameful.

Most simply, as the Economic Policy Institute makes clear, it is “impossible for families to lead economically secure lives on the minimum wage.” And while a rise to $10.10 an hour would lift wages for millions of people, it would leave most of those scrambling to determine whether to buy enough food (especially with the new and prospective cutbacks in SNAP, the Supplementary Nutrition Assistance Program, the current name for the more familiar food stamp program), to set aside a bit of money for college, to handle the mortgage on their home, and so on, day-in, day-out. Bitter choices all around. That is why some governing authorities have agreed to a substantially higher minimum wage. The leading example is Seattle, where almost immediately after taking office in January, Mayor Ed Murray established $15 minimum wage for city workers.



But note well: That’s for city workers, which is as far as the mayor’s authority extends. Businesses in Seattle may or may not follow suit. And whether the minimum can be significantly raised in New York City, in Louisville, in Orlando, around the country, no one can say for sure.

The other day, I was honored here in Boston for my devotion to social justice. My nephew, Michael Fein, was attentive to the comments at the adjacent table — all Black people, among whom was another of that morning’s honorees. And as I used my few minutes to assail the notion that an increase in the minimum wage to $10.10 was cause for celebration, what my nephew heard from that table was, sotto voce, “Amen, brother; tell it, brother.”

I am of course happy to have my words elicit a chorus of “amens.” But hey, I was preaching to the choir. And there are things the members of the choir know that seem to escape most people. Example: A third of minimum wage workers are over 40, not the fast-food hamburger-flippers most people think of in this context. (Indeed, 88% of workers who would benefit from a higher minimum wage are older than 20.) And study after study shows that increasing the minimum wage does not stifle business, the loud opposition of the restaurant industry notwithstanding.

What, after all, is a minimum wage? The name of the law that established the minimum wage is the “Fair Labor Standards Act of 1938.” It was and is meant to protect workers from exploitation, in the same way that child labor laws and overtime pay rules do. So the issue before the nation is not whether or not there should be a minimum wage but whether $7.25 an hour, the current minimum, or $10.10 an hour, the proposed minimum, provides sufficient protection. That is not a rhetorical question. The federal Department of Health and Human Services holds that a family of four needs $23,850 (in 2014 dollars) to move beyond the poverty line; a $10.10 minimum wage would earn a full time worker $21,008 for the year — i.e., less than the poverty line.

Or try another factoid: The largest non-government employer in the United States is Walmart, with some 1.3 million workers. Those workers earn an average of $8.81 an hour — above the federal minimum wage, but substantially less than the $10.10 now in play.

My own preference is that we move, as quickly as we can, from debating the size of the minimum wage and begin talking instead about a living wage. And by “living wage” I mean that a full time worker earning a living wage would make a penny (or more) above the poverty line. That would likely be a significant stimulus to the economy, and would also address, to a degree, the issue of inequality. As it happens, it is also the right thing to do.

A wise man, knowing my views on the matter, counsels caution. Even $10.10 is a political stretch. If you’re going that route, he says, why not go for $20.20, or $40.40?

Why not? Because it is important to stake out not just the politically feasible but also the morally desirable. As simple as that.

But even if we stay in the constricted space of the minimum wage, surely we can do better than $10.10. At the very least, a family (including single mothers) that relies on the minimum wage should earn enough to move beyond the poverty line.

Where, pray tell, is the downside to that?

Contact Leonard Fein at feedback@forward.com


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