One particular action that the federal government can take that will beneficially impact working individuals living below the poverty line is to increase the minimum wage to a living wage.
Oxfam America recently held a panel discussion during which speaker Ai-Jen Poo told the story of Marina Lopez. Ms. Lopez had been hired as a domestic worker to provide care for a child with a disability, but she was quickly given additional responsibilities once she began her position, including cooking, cleaning and doing laundry for a family of six. She was expected to work 14-16 hours a day, six days per week, and although she was granted shelter by her employers in their basement, flooding from the sewers into her sleeping quarters was a frequent problem. Despite all her hard work and the unhealthy conditions in which she lived, her salary amounted to just under $3 per hour.
While today this story might seem like an extreme example of the growing disparity between rich and poor, it is, as Ms. Poo pointed out, not at all unusual, and is becoming more common as the baby boomer population, whom some have called the silver tsunami, begins to require greater medical and long-term care. What is even more outrageous is that under the current version of the Fair Labor Standards Act, “casual babysitters and persons employed as companions to the elderly or infirm” are exempt from minimum wage and overtime requirements.This means that employers, like those of Ms. Lopez, have legal recourse to demand that their home care employees work long hours for subpar wages.
Historical Bias for Minimum Wage and Overtime Exemptions
Present attitudes toward service sector labor often emphasize that the jobs are low skill, and as such deserve lower pay. These attitudes have been deeply entrenched in our society since the first part of the 20th century.
At that time, as now, many service jobs, including domestic work, were often held by free black Americans. As Franklin D. Roosevelt was pushing for the Fair Labor Standards Act of 1938, numerous politicians fought to keep pay for these jobs low, and to prevent blacks from establishing a voice in local legislatures and joining the middle class. One politician of the time stated, “You cannot prescribe the same wages for the black man as for the white man.”
Even though President Roosevelt disagreed with this viewpoint, he knew the bill would not pass without the support of the politicians. He compromised by exempting many of the jobs held predominantly by black Americans from receiving the same benefits as other types of labor. These concessions to the laws regarding the wages and benefits of service workers still affect women of color, because “Domestic workers are, in their majority, women of racial and ethnic minority groups.”
Benefits of Increasing the Minimum Wage
A new push to promote the Fair Minimum Wage Act of 2013 (H.R. 1010/S. 460) has begun. The act contains three main components. It will:
- Increase the federal minimum wage from $7.25 to $10.10 in three stages.
- Tie the minimum wage to the inflation index so that living wages can be adjusted annually.
- Increase the $2.13 minimum wage for workers who rely on tips by 85 cents each year until the wage is 70 percent of the new federal minimum.
Additionally, the government proposed to clarify the regulations regarding compensation and working conditions of home care and other domestic workers.
If the act passes, the benefit to women and low-income individuals and families would be substantial, especially when considering that:
- Women account for nearly two-thirds of all minimum wage workers and are the primary breadwinners or are co-breadwinners.
- A minimum wage of $10.10 would increase annual earnings by $5,700—enough to pull a family of three out of poverty.
- More than 30 million workers impacted by the increase will spur greater economic activity.
- A higher minimum wage would help close the wage gap.
Passage of the act, which is in its final rule stage, would signify the first step in alleviating poverty for many hardworking individuals.
Still, opponents of the act fear that raising the minimum wage will increase unemployment levels and make it difficult for younger or inexperienced workers to find jobs, with employers hesitant to hire someone who may possess few skills at a higher price. This argument does not hold up when one considers that greater numbers of educated and experienced workers have been taking low-wage jobs in recent years as a result of layoffs and higher unemployment rates.
Local Legislation Supporting Higher Wages
Many states have proposed their own laws to strengthen their minimum wage legislation. Several states also mirror the Fair Minimum Wage Act of 2013 in that they not only wish to raise the minimum wage but also aim to link it to future increases to the Consumer Price Index (CPI).
- Rhode Island’s S0256 is set to raise its state minimum wage to $8.25 by January 2014.
- New Hampshire’s HB501 re-established the hourly minimum wage for the state.
- New York‘s A07147 will amend existing legislation, allowing its local governments to pay higher minimum wage benefits.
- California’s AB10 proposes to link the minimum wage to the California CPI and automatically raise the wage each year based on rises in inflation.
- Massachusetts’s H. 1757 aims to raise the minimum wage and link future increases to the CPI.
- Connecticut Gov. Dannel P. Malloy of Connecticut signed a bill to increase wages over the next two years, from $8.25 to $8.70 by 2014, and then up to $9 by 2015.
A local ballot initiative in Seattle is backing a motion that will set the minimum wage for the city at $15—which, if approved, would set the highest minimum wage in the country and the first law designating a minimum wage for a city.
Good Wages Equal Good Business
Linking the wage to the CPI is a way to ensure that minimum wage increases occur regularly without the requirement of passing additional laws or bills. This would ensure that wages keep up with inflation and, to some extent, productivity.
There is ample evidence that increased minimum wages are beneficial to businesses. A higher minimum wage on border businesses in Idaho (where the current federal minimum wage is $7.25) and Washington (where it is $9.19, the highest in the country) shows that the minimum wage alone is not a significant draw for Washington-based businesses to relocate to Idaho. Other factors, such as a higher income and business tax relief, were cited as more important to business owners, suggesting that the bleak outlook envisioned by opponents of the Fair Minimum Wage Act of 2013 may be overstated.
Some worry that the cost burden incurred by businesses that must comply with paying higher minimum wages causes businesses to raise prices in order to afford their workers’ higher salaries.
But many who support raising the minimum wage say that this is an exaggeration. If wages had been tied to increases in worker productivity, the minimum wage today would be $22.72, while prices for a Big Mac would have risen only 4 cents at the same time. This means that businesses are operating at greater profit margins, and that a minimum wage increase is not only affordable but also morally sound. In fact, when accounting for inflation, today’s current minimum wage is actually worth $2 less than it was in 1968.
Not all businesses subscribe to a model whereby they aim to pay their workers the least amount possible to make their businesses viable. Costco is well known for paying its workers premium salaries, with many workers starting at around $15 per hour and with eligibility to receive paid time off and health insurance. When asked why Costco paid its workers so well when compared with Wal-Mart and other retailers, Jim Sinegal, Costco’s CEO at the time, said, “Why shouldn’t employees have the right to good wages and good careers? … It absolutely makes good business.” And with the potential to help millions of women, children and families escape poverty, it makes good sense for society, too.
- Urge your senators and representatives in Congress to support H.R. 1010 and S. 460, the Fair Minimum Wage Act of 2013.
- Contact your city or local government representatives to find out the minimum wage in your community. Advocate for a living wage.
- “Elizabeth Warren—Senate HELP Committee—Minimum Wage,” published on YouTube on March 15, 2013
- “The Faces of America’s Hungry,” presented on the Moyers & Company website on June 28, 2013
- “President Obama on Ensuring Fair Pay for In-Home Workers,” published on the White House website on December 15, 2011
- “Living on Minimum Wage,” an article in The New York Times
- Resolution 4135, “Rights of Workers” (pages 609-614), in The Book of Resolutions of the United Methodist Church (2012)