A restaurant worker at a May 26, 2021 “Wage Strike” demonstration organized by One Fair Wage in Washington, D.C.
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The coronavirus crisis has brought new attention to income and wages.
It has been 12 years since the federal minimum wage was last raised. Congress is yet to decide if a raise in minimum pay will be passed.
The federal minimum wage currently stands at $7.25 an hour. Congress approved the pay increase in 2007. It was gradually increased to the current $7.25 an hour in 2009.
This is a problem for many workers who are trying to survive.
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“The minimum wage is much lower than it was in 1968, when it was at its peak,” stated Lawrence Mishel, economist and distinguished fellow at Economic Policy Institute. This institute tracks changes in minimum wage.
He stated that this was despite the fact workers’ productivity and efficiency having more than doubled.
Mishel stated, “The failure of increasing the minimum wage has really undercut wages for the bottom third of workers.”
The fight to raise the federal min wage to $15 an hour in January was unsuccessful.
One reason: This change was forbidden during the so called reconciliation process. A push by some lawmakers to increase the wage rate was therefore not included.
While some Americans are clamoring for more stimulus checks to be increased, others wonder: Why can’t we have an increase in the minimum wage?
Uncertain outlook for the Congress
Shai Akabas, director for economic policy at the Bipartisan Center, stated that efforts to raise the minimum wage in Capitol Hill are still on the Democrats’ agenda.
He said that it doesn’t seem like a long-term goal.
Akabas stated that it seemed unlikely that such a thing would happen within the next few months.
One reason is that Democrats are talking again about pushing their next package through the reconciliation process. Therefore, a higher federal min wage would not be eligible for inclusion.
While the fight on Capitol Hill for a higher federal min wage seems to be over, it has ignited consumer desire that is leading to an upward push for wages, said Ed Mills of Raymond James, Washington policy analyst.
Mills stated, “Democrats didn’t get their minimum wage legislationally, but they created market conditions where in many parts this country, $15 an hour signs are in businesses after business window.”
Mills stated that wages rose to $15 an hour faster than if it were done legislatively.
Certain states and companies move towards higher pay
Some companies have been praised for their hourly wage goals. Bank of America has announced that it will raise its minimum wage to $25 an hour by 2025. Target and Amazon have also made headlines promising to pay $15 an hour.
States are taking steps to increase their minimum wage rates. They do not have a $15 hourly wage yet, but states like Florida are trying to make that happen by 2026.
According to Business for a Fair Minimum Wage (which is promoting higher wages), only four states currently have minimum wages that are greater than or equal to $12.50 an hour. These include Washington, Massachusetts, New York, and Massachusetts.
Currently, wages in 20 states are no higher than the federal minimum wage of $7.25.
President Joe Biden, for example, has proposed to raise the federal minimum wage for federal contractors from $15 an hour to $15.
According to Mishel, rising inflation is one of the problems with waiting to address low hourly wage levels.
He said that inflation has already reduced the minimum wages quite a bit.
One argument against raising hourly pay rates is that it could harm businesses and employees. Mishel stated that there is not much evidence to support these claims.
He stated that there are some firms that close but others that open up. “One could ask, if a company can only survive with substandard salaries, is that a good outcome?”