We are currently in the longest period of inaction on the federal minimum wage since its inception in 1938. It was 17 years ago this month that it was increased to $7.25 — which leaves today’s wage floor at its lowest (inflation-adjusted) value in seven decades, and its purchasing power much less than its 1968 peak.
In fact, today the federal wage floor is officially a poverty wage.
Given that 30 states and D.C. have wage floors higher than the federal rate, does the federal minimum wage matter today? Yes, it does – because that still leaves 20 states that effectively have $7.25 as their minimum wage. This includes most of the states that make up the Southern Region, which also have the highest shares (noted in parentheses) of their respective workforces earning below $15 per hour – including Alabama (18%), Arkansas (20%), Georgia (15%), Kentucky (18%), Louisiana (25%), Mississippi (26%), North Carolina (16%), Oklahoma (21%), South Carolina (16%), Tennessee (14%), and Texas (17%). These states have some of the highest rates of poverty in the country, and the lowest shares of their workforces represented by unions.
Raising the federal minimum wage was one of the 14 policy briefs featured in CEPR’s recently released Majority Agenda series, which highlighted issues where Americans express a significant degree of agreement regardless of party affiliation.
The minimum wage is one of the clearest such examples. When asked if the $7.25 federal minimum wage is enough for the average worker to afford basic necessities, 86 percent of likely voters said it was not – including 89 percent of Democrats, 85 percent of independents, and 84 percent of Republicans.
And yet there are few lawmakers in Congress who are serious about addressing this issue. The Living Wage for All Act, introduced in April, calls for an increase in the minimum wage to $25 an hour by 2031. This would be a serious step in the land of plenty to move the federal wage floor from a poverty wage to one closer to a living wage. It remains to be seen whether Congress will take action.
This first appeared on CEPR.
