Bryce Covert on November 15, 2012 – 10:35 AM ET
Voters didn’t just send President Obama back to the White House on Election Day. They also voted to raise the minimum wage in three different cities. Albuquerque, NM raised its minimum wage from $7.50 to $8.50 per hour, and it will automatically adjust to keep pace with the cost of living in future years. San Jose, California, raised its minimum wage from $8 per hour to $10, and it will also adjust automatically. Long Beach, California, went even further, not only giving hotel workers a living wage adjustment to $13 an hour, but also guaranteeing them five paid sick days per year. The first two raises alone will impact an estimated 109,000 workers.
Yet action to raise the minimum wage of $7.25 an hour is completely stalled at the federal level. It’s been stuck for over three years and it still isn’t indexed to inflation. That wage adds up to a pitiful $14,500 a year, not enough to make rent in any state. It’s over $3,000 below the poverty line for a parent with two kids. Its purchasing power is 13 percent lower than in 1979. Yet the average minimum-wage worker earns about half of his or her family income.
Voters’ decision to up the pay for minimum wage workers couldn’t have come at a better time. A report released today from the Center on Budget and Policy Priorities shows income inequality has spread like a rash across all fifty states, with the average income of the top 5 percent of households now 13.3 times the income at the bottom fifth. The biggest cause of this gulf identified in the report is the growth in wage inequality. “Wages at the bottom and middle of the wage scale have been stagnant or have grown only modestly for much of the last three decades,” the report notes. “The wages of the very highest-paid employees, in contrast, have grown.” This phenomenon is thanks to a variety of causes, but a big one is a failure to raise the minimum wage. The report’s first recommendation for fixing this mess? Raising and indexing the minimum wage.
It would make a huge impact in the lives of the millions of minimum wage workers. The CBPP calculates that a mere twenty-five-cent increase in the minimum wage would mean an extra $520 a year for a full-time worker. If one plan to gradually raise the floor to $9.80 by July 1, 2014 were enacted, 28 million workers would get a raise of nearly $40 billion in additional wages.
And it will have an impact on more and more workers in our new post-recession economy. A recent report from the National Employment Law Project found that mid-wage occupations lost the most jobs during the recession, but during the recovery low-wage jobs have grown the fastest—nearly three times as fast as mid- and high-wage jobs. We’re swapping out middle class work for minimum wage jobs. That makes a raise in the minimum wage even more urgent.
The electorate writ large would agree. Election Day wasn’t the first time voters have approved a raise. As NELP reports, “When ballot initiatives to raise the minimum wage reach the voters, they have in almost all cases been approved by substantial majorities.” All three of Tuesday’s referendums passed with nearly 60 percent of the vote or more. And raising the minimum wage isn’t just supported by a majority of voters in select cities. In post-election polling, Greenberg Quinlan Rosner found that a huge plurality of voters are for it. Nearly 70 percent of respondents support a raise, with 47 percent strongly in favor. A mere quarter stood against it.
Our economic times demand a raise in the minimum wage. The Economic Policy Institute estimates that it could increase GDP by about $25 billion and create approximately 100,000 net new jobs. Perhaps even more importantly for lawmakers, though, is that American voters also demand it. What’s the excuse for failing to give workers enough money to live on?
As Walmart workers demand higher wages, the superstore is cracking down. Check out Josh Eidelson’s coverage here.