We’ve hit a terrible milestone for the federal minimum wage – 12 years without a raise. The last increase was to $7.25 an hour on July 24, 2009.
That’s so long ago, the top movies that year were “Transformers: Revenge of the Fallen,” “Harry Potter and the Half-Blood Prince,” Up,” “The Twilight Saga: New Moon” and “Avatar.”
The minimum wage has not gone up, but prices have.
It would take a minimum wage worker 79 hours per week on average to afford a modest one-bedroom at Fair Market Rent, according to the National Low Income Housing Coalition.
The minimum wage has become a poverty wage instead of an anti-poverty wage. That hurts workers who can’t afford the basics, and it hurts businesses that count on customers with money to spend.
We’re in the longest period without a raise since the minimum wage was first enacted in 1938 to to set a decent minimum standard of living, boost consumer spending, and help workers and businesses recover from the Great Depression.
Buying power declines
The minimum wage used to increase regularly as worker productivity rose and the economy grew. But in recent decades, increases have been too little, too late to keep up with the cost of living, and the rewards of economic growth have gone increasingly to the top.
The federal minimum wage peaked in buying power in 1968, when it was worth more than $12.50 in 2021 dollars, according to the U.S. Bureau of Labor Statistics. Today, only D.C. and four states — California, Massachusetts, New York, Washington — have a statewide minimum wage rate currently in effect that is greater than or equal to $12.50. Connecticut joins them with an Aug. 1 increase.
Imagine going back in time to December 1968, when Apollo 8 astronauts made history by becoming the first humans to orbit the moon. And telling people that in 2021, the minimum wage would have much less buying power, but we’d be in a space race among billionaires.
Twenty states have minimum wages no higher than the $7.25 federal level. Alabama, Louisiana, Mississippi, South Carolina and Tennessee have no state minimum wage, while Georgia and Wyoming have a $5.15 minimum wage, so the $7.25 federal minimum wage applies. The others are Idaho, Indiana, Iowa, Kansas, Kentucky, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, Texas, Utah and Wisconsin.
Workers and businesses in these states and many others with inadequate minimum wages are counting on a federal raise.
“When wages are too low, everything is affected -- home life, health, education and productivity on the job,” said Chrissy Jensen, owner of Domestica in Des Moines, Iowa. “Raising the minimum wage to $15 will give people some room to breathe. They’ll be better workers and better customers.”
Businesses know their own pay practices are important, but not a substitute for a federal raise.
“We know that happier employees make for happier customers,” said Jordan Scott, co-owner and chef of Machina Kitchen & ArtBar in Keene, New Hampshire. “But the $7.25 minimum wage leaves people in the food industry struggling to put food on their own table and keep a roof overhead. That hurts our local economies. It hurts the local farmers who depend on local restaurants like ours who do better when our communities do better.”
Momentum for a $15 minimum wage is growing. Delaware is the 10th state -- joining California, Connecticut, Florida, Illinois, Maryland, Massachusetts, New Jersey, New York and Rhode Island -- to enact a $15 minimum wage (with varied phase-in schedules).
But without a federal raise, millions of Americans will be left behind.
The U.S. House of Representatives passed the Raise the Wage Act, which would increase the federal minimum wage to $15 by 2025, but the Senate has not followed suit. One way or another, Congress needs to get it done.
Raising the minimum wage will help us build a widely shared recovery and more resilient economy.