Tag Archives: Federal minimum wage indexed to inflation

Time to Increase the Federal Minimum Wage and Index It to Inflation

As the Huffington Post points out it’s been 4 years since the last increase in the Federal minimum wage. It’s time to raise the minimum wage and index it to inflation so that Congress does not repeatedly ignore inflation impacts on the wages of low income workers. Corporate millionaires  seem to have no problem getting their income raised. Why do Republicans in Congress hate low income workers?

If you raise the minimum wage, low income workers will spend the money and help the economy.  Henry Ford long ago understood that if he didn’t pay his workers reasonable wages they weren’t going to be able to buy his cars. It seems conservative and Tea party Republicans in Congress both don’t understand or care.

As an article a year ago in Deseret News noted:

The federal minimum wage, which is $7.25, hasn’t changed since 2009. In real terms, America’s lowest-paid workers make less than they did in 1968, according to Remapping Debate. With an annual income of $15,080, a full-time minimum wage worker’s salary is just under the 2012 federal poverty threshold of $15,130 for a family of two. It falls well below the poverty threshold for a family of three, which is $19,090.

A year later nothing has changed. Republicans continue to sneer at low income workers rather than working for fairness and a more equitable distribution of the fruits of business that don’t just increase wages and benefits for those at the top and increase dividends for stock holders, while ignoring the real life day to day plight of many of their workers.

While Congress is under siege by Republican lawmakers opposes raising the minimum wage, states have fared better in increasing it. As Stateline pointed out earlier this year:

“…minimum wage hikes at the state level have been popular among voters: Since 1998, proposed increases have been on statewide ballots 10 times in nine states, and all of them were successful. In those elections the ballot measures won an average of 65 percent of the vote, according to the Ballot Initiative Strategy Center, a progressive Washington, D.C., group that advocated for the hikes.”

Washington State has the highest state minimum wage in the country at $9.19 an hour. It has remained as a leader in keeping pace with inflation because when it was passed by the voters it included language for an automatic increase each year based on inflation. When Initiative 688 was passed by the voters in 1998, Washington State  was the first state in the country to put in place an automatic inflation increase each year. Unfortunately the federal minimum wage law does not and is subject to continual delays and battles in Congress to try to increase it to keep pace with inflation.

New Jersey has a minimum wage increase initiative on the ballot this year. Stateline notes that

If New Jersey voters approve the measure on the ballot there, the state would become the 11th with annual automatic increases to the minimum wage indexed to inflation: Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washington already index. In all of them except Vermont, voters approved the measure with the automatic hike at the polls.

Congress needs to act to be fair and just to low income workers in our country. Conservative politics driven by Tea Party Republicans and libertarian philosophy needs to be shown for what it is – a hypocritical joke where tax breaks for corporations and special interests rule their decisions to benefit the well off and few while millions struggle to meet basic living expenses.

The country is continuing under conservative policies to further divide the rich and poor.  Wealth continues to be concentrated in the hands of fewer and fewer Americans. More states need to push for increases in their state minimum wage, putting more pressure on Congress to act.  Republican anti-worker positions needs to be challenged  and voters supporting state minimum wage laws that include automatic increases for inflation are one way to do that. In addition continued pressure needs to be put on Congress to act.


Washington State’s 2013 Minimum Wage Remains Highest in Nation

On Jan. 1, 2013 Washington State’s minimum wage increased by 15 cents to $9.19 per hour.  Washington State’s minimum wage is the highest in the country. Nine other states minimum wages were also increased on Jan 1, 2013.  As noted in the Huffington Post:

Nearly a million low-wage workers will see their earnings rise because of the increases, most of which come courtesy of state cost-of-living adjustments that account for inflation. Washington State will once again have the highest minimum wage in the nation, at $9.19 per hour, after a raise of 15 cents for the new year. The other states raising their wage floors are Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island and Vermont.

The federal minimum wage remains $7.25 per hour, with no cost-of-living adjustment, and prevails in 31 states that do not mandate a higher state minimum wage. The last raise to the federal minimum came in 2009, after a series of increases signed into law by President George W. Bush.    

The increase in the state minimum wages are as follows:

Washington State – increased 15 cents to $9.19/hr

Arizona – increased 15 cents to $7.80/hr

Colorado – increased 14 cents to $7.78/hr

Florida – increased 2 cents to $7.69/hr

Missouri – increased 10 cents to $7.35/hr

Montana – increased 15 cents to $7.80/hr

Ohio – increased 15 cents to $7.85/hr

Oregon – increased 15 cents to $8.95/hr

Rhode Island – increased 30 cents to $7.75/hr

Vermont – increased 14 cents to $8.60/hr

Except for Rhode Island’s minimum wage increase approved by their Legislature last year, the rest of the increases were the result of   state laws indexed to inflation and the consumer price index. Nevada, which also adjusts their minimum wage based on inflation, makes their changes on July 1st and is not included in the current list above.

Washington state was the first state to index their minimum wage to inflation when they passed Initiative 688 in 1998. Oregon followed with an initiative in 2002 and  Florida in 2004. In 2006 there was a big push nationally to index the minimum wage to inflation, with voters in Arizona, Colorado, Missouri, Montana and Ohio passing minimum wage initiatives.

The US Department of Labor  has a color coded map which breaks out state’s minimum wages by categories. Amazingly five states – Louisiana, Mississippi, Alabama, Tennessee, and South Carolina – have no state minimum wage laws.  Four states – Georgia, Arkansas, Wisconsin and Wyoming – have a state minimum wage lower than the federal minimum wage of $7.25.  Twenty states have a minimum wage higher than the federal minimum wage of $7.25 and the rest of the states set their minimum wage at the Federal level.

Legislation has been before Congress to try to index the federal minimum wage to inflation, the same as Washington State does, but Republicans in Congress have prevented action on moving the legislation. Congress has a dismal record on dealing with increasing the Federal minimum wage.  As the Labor Law Center   notes,  Congress increased the minimum wage to $5.15 in 1997.  It took another 10 years to increase it to $5.85 in June of 2007, then $6.55 in June of 2008 and $7.25 in June of 2009. It has not increased since then.

As noted in the Huffington Post article:

Last year, Democrats in the Senate and the House of Representatives introduced legislation known as the Fair Minimum Wage Act, which would have raised the federal minimum wage to $9.80 per hour after three years and indexed it to inflation. Those bills failed and are expected to be reintroduced in the coming Congress, although the Republican-controlled House is unlikely to pass an increase to the minimum wage.

President Barack Obama, while campaigning in 2008, pledged to hike the minimum wage to $9.50 an hour and index it by the end of 2011, “to make sure that full-time workers can earn a living wage,” as he said on his transition website. Obama ultimately failed on that pledge and hasn’t been vocal on the issue since his initial campaign. As EPI has noted, if the federal minimum wage had kept pace with inflation since its high in the late 1960’s, it would now be above $10 per hour.

Further action can be taken on the state level via both legislative efforts and initiative efforts.  For example, as Minnesota Public Radio reports,   the new legislative majority in Minnesota has prioritized raising their minimum wage and indexing it to inflation.

State Sen. Chris Eaton, DFL-Brooklyn Center, is sponsoring legislation to increase the minimum wage for large employers by $1.35 an hour to $7.50 an hour, and provide for automatic inflationary increases in the future. “Putting more money in the pockets of minimum wage earners is good for the whole economy,” Eaton said. “The money is going to be spent in local businesses, on job training courses and covering rent.”

The Initiative and Referendum Center lists 24 state’s that have the initiative process.  While it is more difficult in some states than others to get on the ballot, there are 15 additional states that could pass state minimum wage initiatives that are indexed to inflation. They are Alaska, Arkansas, California, Idaho, Illinois, Maine, Massachusetts, Michigan, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Utah and Wyoming. A couple of big states like California, Illinois, Massachusetts, and Michigan passing new state minimum wage initiatives indexed to inflation would give a big boost to efforts to enact such legislation in Congress.

Minimum wage legislation indexed to inflation is a progressive issue and could certainly boost turnout of Democratic voters in key states and help elect a more Democratic Congress keyed to helping average citizens rather than boosting corporate profits and concentration of wealth in the hands of a few.  This is something to keep in mind regarding the 2014 and 2016 elections where members of the House and Senate are running.

Also as Henry Ford knew when he paid his workers higher wages than other industries, he was providing them with income to buy his cars. People working at or near minimum wages are barely getting by and are not going to put their money in a savings account.  They are going to spend it which keeps the money in circulation stimulating the economy. This helps everyone.