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No One Can Live on $7.25 an Hour

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MINIMUM WAGE
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Why raise the minimum wage to give teenage McDonald's workers more money, right? That line of thinking may have made sense decades ago, but it doesn't now. The average age of a fast food worker is 29 years old (for women specifically, it's 32), and 36 percent of fast food workers older than 20 have kids. And the average age of a big-box retail worker is over 30. No one can live on the current federal minimum wage of $7.25 an hour -- a figure that hasn't moved a penny since 2009.

Minimum wage workers are no longer kids flipping burgers in the summer for some spending money. These are people trying to live. Many of them are trying to support themselves and their families, and they can't do it on $7.25 an hour. No one can. An hourly wage of $7.25 works out to $290 a week and $15,080 a year (before taxes, and without a single day off except for weekends). No one can live on that as an individual, much less someone supporting a family. When I was washing dishes and busing tables at restaurants as a kid, I was making $4.25 an hour -- the minimum wage in 1994 -- but all I needed was some spending money and maybe a few extra dollars to buy myself the nicer basketball shoes my parents couldn't afford to get me. I wasn't supporting anyone, not even myself.

And beyond helping our nation's lowest-paid workers pay their rent and put food on the table, raising the minimum wage would also be a big boost to the economy. There are many studies I could cite here to explain this, but I'm not going to, because they're not needed. This is a straightforward, simple and rational argument. Here it is: if you make $7.25 an hour and are married with a kid or two, you're spending every penny you earn. You don't have a savings account, you aren't remodeling your kitchen and you're not investing in the stock market. Every dollar you're making is going into the economy -- toward things like rent, food and clothes. If these workers get a little more money in their pocket they're going to spend it. All of it. And that money will have a ripple effect throughout the economy (this is known by economists as the multiplier effect) -- unlike, say, tax cuts for the nation's wealthiest. You think they're buying more food or a winter coat for their kid with their extra money? No. They have more than they need and will simply take this extra money and remove it from the economy by stashing it away in the Cayman Islands or gambling it in the stock market.

Between 1968 and 2009 Congress increased the minimum wage by $5.65 (from $1.60 to $7.25), but as the Congressional Research Service states, "the real minimum wage fell [because] ... legislated adjustments did not enable the minimum wage to keep pace with the increase in consumer prices." This is another straightforward, simple and rational argument -- when goods and services increase and the wages for the nation's lowest-paid workers do not, there's a problem. And there's been a big problem in this country since 1968, which has played a large part in the raging gap between the rich and the poor since that time.

Others say that raising the minimum wage would hurt employment, but that's not really the case either. Last year House Speaker John Boehner said, "When you raise the price of employment, guess what happens? You get less of it," but the data is not there to back up the speaker's talking point. According to a study by the University of Chicago's Booth School of Business, leading economists agree by a nearly four-to-one margin that the positives of raising the federal minimum wage outweigh the negatives. And businesses can absorb the slight increase in their payrolls by slightly increasing the price of their products, which leads to the opposition's next scare tactic -- if you raise the minimum wage, the price of a hamburger would increase to $20, a claim made recently by Oklahoma Republican Congressman Markwayne Mullin. Will prices increase if we raise the minimum wage? Probably a little. They don't need to and shouldn't (I think McDonald's would still be a pretty profitable company if they paid their employees a living wage), but they probably will raise prices a bit, as their executives will do all they can to avoid anything that would hurt their compensation (former McDonald's CEO James Skinner earned over $9,000 an hour in 2012, or about $20 million a year). At the same time, the minimum wage varies between states (for example, it's $7.25 in New York but $8.00 in California) but the price of a Big Mac is roughly the same everywhere: about $3.99.

Many advocates are calling for $15 an hour, which seems like a big jump. Should fast food workers really be making that much an hour? In Beaver City, Nebraska, probably not, but in cities like New York, San Francisco or D.C., they probably should. Hopefully that $15 figure is a starting point to begin negotiations. President Obama is calling for $10.10 an hour, which is actually a bit lower than what the minimum wage was (accounting for inflation) in 1968. According to the Bureau of Labor Statistics' CPI inflation calculator, the current minimum wage should be $10.71. So, maybe Congress can compromise somewhere between $7.25 and $15.00. $11.10 sounds good and is right in the middle of those two numbers. Unfortunately, we're dealing with the most partisan and unproductive Congress in our nation's history, so who knows what, if anything, will happen.

There's a reason Congress' approval rating has been around 10 percent for so long -- they're completely out of touch, too tight with corporate America and unable to work together to accomplish anything of real significance. And can members of Congress, more than half of whom are millionaires, really relate to minimum wage workers? Has any of them ever had to support themselves or a family with a minimum wage job, or even known someone who has? I don't think Darrell Issa, Mitch McConnell or Nancy Pelosi has ever stocked shelves at a grocery store, pumped gas at a gas station or washed cars at a car wash for a living. Our representatives no longer represent us. They're not citizen legislators; they're career politicians. They represent themselves, their corporate friends and lobbyists and no one else. If they did represent us, they would have passed gun control legislation last year, given that 90 percent of Americans supported it, and they would raise the minimum wage to $10.10 an hour, as 73 percent of Americans favor this.

Meanwhile, members of Congress make $174,000 a year (but that's only those who aren't in leadership positions -- Boehner, Reid, etc., make more) and get an automatic cost-of-living increase in their pay every single year. They actually have to bring a bill to the floor and vote down their automatic pay raise for this not to happen, which, surprisingly, they've done a few times since 2009.

At least there's some hope as states across the country are thumbing their noses at the fools in Congress and raising their state's minimum wage. At the start of this year, 13 states raised their minimum wage, but none of them increased the wage to what it should be to account for inflation ($10.71) or what congressional Democrats and the president have called for ($10.10).

From every angle, raising the minimum wage just makes sense. It's the right thing to do and will help us all. The bottom line is that prices have continuously increased, and the minimum wage has not kept up. And that needs to be fixed. Raising the minimum wage by just $2.85 an hour to $10.10 would push nearly 5 million of the working poor out of poverty and would push many of them off government assistance programs, which they still qualify for despite working full-time jobs.

Hopefully the president won't just keep talking about the idea of raising the minimum wage. Hopefully he will pressure Congress enough and get it done. Although Obama has called income inequality "the defining challenge of our time," he hasn't done all that much to combat this challenge. Raising the minimum wage would change that.