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Raise the Minimum Wage

Currently, the average minimum wage worker makes about $15,080 per year if she or he is working fulltime (federal minimum wage has been $7.25/hour since 2009). For a family of two or more that is well below the federal poverty line. According to Catholic Social Teaching, a living wage is integral to our understanding of work. Wages must allow workers to provide for themselves and their families, and yet this is hardly possible if one is dependent on the current minimum wage.

The Fair Minimum Wage Act of 2013 was introduced in both houses of Congress in March 2013 and was immediately referred to Committee, where it has remained ever since. If passed, it would provide America's minimum wage workers with a raise while boosting the consumer spending that fuels the economy. Over 30 million workers would receive a raise, and who these workers are may surprise you: 88% of minimum wage workers are adults over the age of 20, 56% of them are women, and 50% of them are people of color. Forty-three percent of minimum wage workers have at least some college education. More than 17 million children have a parent who would be affected by the legislation.

If the legislation is passed, it will raise the federal minimum wage to $10.10/ hour by the year 2015, in three steps of $0.95. Importantly, it would adjust the minimum wage to keep pace with the rising cost of living through indexing, a process that 10 states are already using to maintain the buying power of the minimum wage. The Act would also raise the minimum wage for tipped workers to approximately 70% of the federal minimum wage.

On September 17, 2013, the Labor Department issued final rules that extended the federal minimum wage and overtime protections to the nation's home care workers, which covers hundreds of thousands of low-wage workers who have never been covered by the minimum wage before.

Christine Owens, Executive Director of the National Employment Law Project (NELP), issued a statement when the legislation was introduced in Congress calling for an increase in the minimum wage: "It's clear what needs to be done. It's time to raise the federal minimum wage -- raise it over time to $10.10 an hour. Boost the guaranteed minimum wage rate for tipped workers, which has been stuck at $2.13 since 1991. And index the overall minimum wage to the cost of living." To learn more about the federal minimum wage, visit our partners at the National Employment Law Project.

While we wait for action at the federal level, many states and municipalities are already acting on this critical issue. Beginning January 1, 2014, an estimated 2.5 million workers in the U.S. received a boost in their paychecks because 13 states raised their minimum wage. That figure, according to an analysis by the NELP, will have the largest impact in New Jersey, where 11.5 % of the workforce will be helped by the increase. New Jersey’s is also the largest of the 13 state increases, at 13.79%, bringing their minimum wage to $8.25. Workers in Washington State will now have the highest state-mandated minimum wage at $9.32/hr.

Proposals to raise the minimum wage directly address the country's high levels of income disparity since minimum levels usually set the stage for other wage increases and most metrics show that wages have stagnated or declined for millions of working families. One of the major obstacles to our economic recovery is the growing gap between real wages and productivity, which has violated the traditional relationship between real wages and consumption. If the productivity of each worker is rising strongly -- and it has been -- yet that worker's capacity to purchase is lagging behind -- how does economic recovery, which relies on growth in spending, sustain itself?

Opponents of raising the federal minimum wage suggest doing so will be bad for the economy’s recovery, may raise unemployment, and unfairly burdens businesses. However, a closer look shows those concerns are overstated, and sometimes plainly false:

  • According to economist James Galbraith, raising the minimum wage would raise the incomes of 28 million Americans. Women would particularly benefit because they tend to work for lower wages than men.
  • Putting more expendable income in the hands of low-income workers, who will spend that money in the real economy, rather than giving it to the super-wealthy, who tend to invest it in various financial products, would boost the economy.
  • An increase of a couple dollars per hour or more in the minimum wage will make huge improvements in the lives of the working poor, perhaps allowing them to exit the debt treadmill and stand a better chance of eventually rising into a revitalized middle class.
  • Arindrajit Dube, an economist at the University of Massachusetts Amherst, published a study on December 30, 2013, that maintains that raising the minimum wage from $7.25 to $10.10/h