Today, we have an opportunity to begin to realign our values by enacting the Fair Minimum Wage Act of 2013 which would raise the minimum wage from $7.25 to $10.10 an hour, the first increase since 2009, and raise the minimum wage for tipped workers for the first time since 1991. The current federal minimum wage is worth 32 percent less in inflation-adjusted terms than at its peak in 1968. If it had grown at the same rate as wages for a typical worker in America since 1968, it would already be $10.65 an hour. But if it had grown at the same rate as productivity of the economy during that period it would be $18.30 today. So increasing the minimum wage to $10.10 an hour would restore the minimum wage closer to what it would have been if it had kept up with average wages but still leave it far below what it should be, given productivity and economic growth since the late 1960s.
Nationwide, increasing the minimum wage to $10.10 would increase a full-time worker’s salary to $21,008 and put $31 billion additional dollars in the pockets of as many as 24.5 million low-wage workers according to the Congressional Budget Office (CBO), Congress’ official budget arbiter. It would lift 900,000 people above the official poverty threshold. Nearly 90 percent of those benefiting would be 20 years or older and over half would be working full time. According to the Economic Policy Institute those affected by the minimum wage increase earn on average half of their family’s total income. The Economic Policy Institute has also found more than a quarter of those benefiting would be parents.
Most importantly, the increase to $10.10 an hour would improve the lives of an estimated 14 million children—nearly one in five children in America—by helping their parents put nutritious food on the table, keep a roof over their families’ heads, and make sure their children get the health care they need to ensure they can develop to their full potential. And an increase in the minimum wage would not cost the government anything—as the CBO acknowledged, it might even save money in the short term as people with increased incomes need fewer government benefits and pay more in taxes.
The increase also would help spur the economy. Recent research from the Federal Reserve Bank of Chicago found that raising the minimum wage to $10 could increase U.S. gross domestic product by up to 0.3 percentage points in the short term. Some resist a minimum wage increase because of fears it would lead to job losses, but after extensive research the latest consensus in the field is that this is not the case. This is why more than 600 economists, including seven Nobel Laureates, have endorsed the increase to $10.10, saying in a joint letter to President Obama and congressional leaders: “In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of the evidence now showing that increases in the minimum wage have had little or no negative effects on the employment of minimum-wage workers, even during times of weaknesses in the labor market.” And even if you don’t believe the newest research is the most valid, and look instead at all the research combined, as the Congressional Budget Office conservatively did in its Feb. 18 report, CBO’s best estimate was that this change would reduce employment by 0.3 percent. Should we really deny a certain income boost to 24.5 million workers to spare a much smaller number uncertain job loss? Of course not. If Congress is worried about uncertain job losses from a minimum wage increase, they could offset them through complementary policies like changes to the Earned Income Tax Credit.