The architect of the New Deal was right when he argued no business that depends on paying less than a meaningful living wage should operate in the US.
A noxious combination of falling wages, income inequality at its highest since the 1920s and a growing low-wage sector has caused the ranks of the working poor to swell to more than 47 million. That’s one out of every seven Americans.
Harnessing the anger and economic pain that workers are feeling at the decimation of the middle class, a living wage movement made up of grassroots groups, unions and community organizations has been pushing hard to reverse that trend on numerous front, including by lifting minimum pay at all levels of government. The activists are targeting a US$15 hourly rate in the retail and fast food sectors and trying to pass living wage resolutions that aim to increase base salaries above the poverty line.
While activists have yet to reach their goals at the federal level, they have been very successful convincing voters in cities and states – both conservatives and liberals – to raise their own minimums closer to a living wage. As more states and cities raise their minimums in a significant way, pressure rises on Congress to pass an increase of the federal minimum wage rate. Workers also are making demands directly of their employers, including a visible campaign among fast food and retail workers demanding higher wages, regular schedules, full-time work and dignity on the job.
Voters want wage hikes
Most Americans support an increase because long-term economic pain has become excruciating for so many. Voters have come to see it and the accompanying income inequality as issues that affect them.
How else to explain why 66% of voters in politically conservative Arkansas, home to Walmart, the country’s largest employer, chose to raise the minimum wage? Prior to the midterm elections, the wage was US$6.25 (one dollar below the federal minimum). Now it will rise to US$8.50 by 2017.
Businesses that directly or indirectly depend on low wages increasingly understand that treating employees well means they will treat customers well. About 62% of employerssurveyed earlier this year on behalf of CareerBuilder.com believe that the minimum wage should rise.
Workers’ woes resonating
One reason the struggles of low-wage workers are resonating with Americans is that so many newly created jobs pay very little. According to a study by the National Employment Law Project, 44% of employment growth in the last four years has been in low-wage jobs. Middle-income positions are being steadily replaced by jobs paying less than $10 an hour. Worse, involuntary part-time work has pulled 7 million Americans into poverty or near it.
While efforts by President Obama and Democrats in Congress to raise the federal minimum wage to US$10.10 withered in Washington this summer, the midterm elections highlighted the strong bipartisan public support for giving it a much-needed boost.
In an overwhelmingly Republican state, a whopping 69% of voters in Alaska endorsed increasing theirs to US$9.75 by 2016 from US$7.75 today. Nebraska followed suit) with 59% approving a US$1.75 bump to US$9 by 2016. In South Dakota, 55% voted to raise the minimum wage) US$1.25 to US$8.50.
By January, 29 of 50 states (and the District of Columbia) will boast minimum wages higher than the federal rate. Additionally, more than 130 cities have enacted legislation or resolutions to restore a strong wage floor. Voters in Seattle and San Francisco have led the way with $15 hourly minimums.
Many cities have also enacted “living wage laws” that establish a higher minimum wage for employers that receive contracts or subsidies from local government. Workers also are making demands directly of their employers, including a campaign among fast-food and retail workers demanding higher wages, regular schedules, full-time work and dignity on the job.
Fast food on the front lines
That fast food and retail workers occupy the front lines of the living wage fight makes sense since the industries employ about two thirds of low-wage workers. The top 12 US companies paying workers the least are national restaurant chains such as McDonalds, Starbucks and Taco Bell and retailers like Walmart, Target and Sears.
Walmart, which earned more than US$16 billion last year, cost American taxpayers US$7.8 billion in subsidies and tax breaks, while the majority of their employees earned less than US$25,000 a year.
Below the poverty line
The federal minimum wage has risen occasionally since 1938 from 25 cents an hour to its current level of US$7.25, where it has remained since 2009. In the 1960s, the minimum wage was equal to roughly half the national average but today it is worth only 37%. Minimum wage workers employed full-time earn just $15,000 a year, falling under the poverty line for a family of two.
If the 1968 minimum wage had kept pace with inflation, it would be US$10.90 today. A 2012 study by the Center for Economic and Policy Research noted that if the minimum wage had kept pace with productivity, it would be US$21.72 an hour, and if it had kept pace with the wage growth of the wealthiest 1%, it would be US$29 an hour.
Moving the economy forward
Raising the federal minimum wage is not enough to reduce the inequality gap that is causing Americans so much pain. We need more jobs that pay a living wage so a family can afford basic needs such as food, adequate shelter and the ability to deal with emergencies and other necessities of life.
When he introduced the federal minimum wage in 1933, President Franklin D Roosevelt said, “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By living wages, I mean more than a bare subsistence level. I mean the wages of a decent living.”
Too many working families are making impossible choices – between paying for food or rent or electricity. A vital US economy that works for all of us needs a thriving middle class. For that to be realized, good jobs – full time with a fair wage that lets families live a comfortable life – must be the norm. The recent ballot box victories and continuing protests across the country prove that Americans understand their collective power to turn the tide.
Read more stories on the minimum wage here.
Photo: AP/Mike Groll