Raise minimum wage? One answer to income disparity, advocates say

At a time of growing income disparity and poverty levels headed toward 50 million Americans, advocates say it’s time to raise the federal minimum wage of $7.25 an hour. Opponents say it would be a 'job killer,' but polls show most Americans favor a hike.

Washington is girding for another debate over raising the federal minimum wage, which has stood at $7.25 an hour since 2009.

Many Democrats in Congress – led by Rep. George Miller of California in the House and Sen. Tom Harkin of Iowa in the Senate – want to raise that $7.25 amount (actually, $4.87 in 1996 dollars) to $10.10 an hour. They also want to raise the minimum wage for those paid in tips as well as wages – frozen at $2.13 an hour since 1991 – to 70 percent of the standard minimum wage.

Meanwhile, those states which have their own higher minimum wage are moving in the direction of increases as well.

In September, Gov. Jerry Brown (D) signed a law raising California’s minimum wage to $10 an hour, which would make it the highest in the country (passing Washington State, which has been the highest at $9.19).

California’s minimum hourly wage will rise from $8 (where it’s been for five years) to $9 on July 1, 2014, and then to $10 on Jan. 1, 2016. The state wage level is not indexed for inflation, which means that Washington State’s (which is) could rise to above $10 an hour by then. A few cities – San Francisco among them at $10.55 – already have set their hourly minimum wage above $10.

Voters in New Jersey this past week overwhelmingly passed a ballot measure raising that state’s hourly minimum wage from $7.25 to $8.25, beginning in January. The measure also amends the state constitution, tying the minimum wage to increases in inflation.

Across the country in the Seattle-area community of SeaTac, voters this week considered a ballot measure raising the minimum wage there to $15. Likely to benefit most are the estimated 6,000 hotel, restaurant, and airport workers near the Seattle-Tacoma International Airport.

That measure also is indexed to the annual inflation rate, but so far vote-counting (mainly mail-in ballots) makes the race too close to call.

The political fight over raising the minimum wage is a familiar one, pitting progressives against conservatives and business interests.

The California Chamber of Commerce calls the new law there a “job killer.”

John Kabateck, head of the California branch of the National Federation of Independent Business (NFIB), warned that "small-business owners will now be forced to make tough choices including reducing employee hours, cutting positions entirely, and for many, closing their doors altogether.”

"We honestly believe there will be a loss of jobs and opportunities," Laurie Ehlbeck, New Jersey director of the NFIB, told NJ.com. "They are not going to hire someone, they will give an employee fewer hours, they may reduce the benefits.” 

In his State of the Union speech this year, President Obama urged raising the federal minimum wage to $9 an hour, but the White House now says it supports the $10.10 figure proposed by Rep. Miller and Sen. Harkin in the Fair Minimum Wage Act. The bill would raise the current federal minimum wage of $7.25 an hour in three yearly increments of 95 cents each, then tie it to inflation.

Opponents of raising the minimum wage frequently argue that workers at that level tend to be teens and young adults without families to support.

But a review of US Census data by The Sacramento Bee newspaper in California found that teenagers in fast-food and other low-wage jobs account for just 5.3 percent of minimum-wage workers; the rest are adults older than 21, including 34 percent who are older than 40.

In principle, most Americans support raising the minimum wage to $10.10 and adjusting it to increases in the cost of living, according to a July survey by Hart Research Associates.

“Approval is voiced not only by Democrats (92 percent) and low-income adults (83 percent), but also by such traditionally conservative groups as Republicans (62 percent), southern whites (75 percent), and those with incomes over $100,000 (79 percent),” the research firm reported.

Debate about raising the minimum wage comes at a time when the subject of poverty in the US is being discussed as well, including recent cuts to the food stamp program.

The number of poor people in America is 3 million higher than the official count, encompassing 1 in 6 residents due to out-of-pocket medical costs and work-related expenses, according to a revised census measure released this week.

Based on the revised formula, the number of poor people in 2012 was 49.7 million, or 16 percent. That exceeds the record 46.5 million, or 15 percent, that was officially reported in September, the Associated Press reported.

The latest numbers come as more working-age adults picked up low-wage jobs in the slowly improving economy but still struggled to pay living expenses.

Writing in the New York Times this month, Mark Rank, a professor of social welfare at Washington University in St. Louis, asserts that “poverty is a mainstream event experienced by a majority of Americans” at some point in their lives.

“My research indicates that nearly 40 percent of Americans between the ages of 25 and 60 will experience at least one year below the official poverty line during that period ($23,492 for a family of four), and 54 percent will spend a year in poverty or near poverty (below 150 percent of the poverty line),” Dr. Rank writes.

“Even more astounding, if we add in related conditions like welfare use, near-poverty and unemployment, four out of five Americans will encounter one or more of these events,” he writes. “In addition, half of all American children will at some point during their childhood reside in a household that uses food stamps for a period of time.”

Growing economic disparity between rich and poor is the subject of former Labor Secretary Robert Reich’s documentary film “Inequality for All” now being shown in theaters around the country.

"The primary reason that poverty remains so high is that the benefits of a growing economy are no longer being shared by all workers as they were in the quarter-century following the end of World War II," University of Michigan economist Sheldon Danziger told the Associated Press

"Given current economic conditions, poverty will not be substantially reduced unless government does more to help the working poor and those who are willing to work but cannot find jobs,” Mr. Danziger said. “We must also expand the reach of our safety-net programs."