Minimum Wage Debate ReignitesPosted: Updated:
Ball State University economist Michael Hicks says he's not sure an across-the-board federal minimum wage increase is "the right medicine" to fix the nation's wage growth problem. He says President Barack Obama's plan to raise the minimum wage for federal contract employees could be a way to spark more conversation about a wider-ranging increase. Hicks believes a dual minimum wage based on age and experience could be more effective. Obama is expected to detail his plan in tonight's State of the Union address. January 28, 2014
WASHINGTON, D.C. - The President wants to work with Congress to pass the Harkin-Miller bill that would increase the Federal minimum wage to $10.10 and index it to inflation thereafter, and he will continue to work with Congress to get that done. The President has also looked at what he can do through executive action to help raise wages for hardworking Americans. In the State of the Union Address, the President will announce that he will use his executive authority to raise the minimum wage to $10.10 for those working on new federal contracts for services.
-Hardworking Americans - including janitors and construction workers - working on new federal contracts will benefit from the Executive Order (EO). This action will cover workers who are performing services or construction and are getting paid less than $10.10 an hour. Some examples of the hardworking people who would benefit from an EO include military base workers who wash dishes, serve food and do laundry.
-A higher minimum wage for federal contract workers will provide good value for the federal government and hence good value for the taxpayer. Boosting wages will lower turnover and increase morale, and will lead to higher productivity overall. Raising wages for those at the bottom will improve the quality and efficiency of services provided to the government. When Maryland passed its living wage law for companies contracting with the state, there was an increase in the number of contractors bidding and higher competition can help ensure better quality.
-The wage increase will be manageable for contractors. The increase will take effect for new contracts after the effective date of the order, so contractors will have time to prepare and price their bids accordingly.
Continuing to Work With Congress to Help All Workers
The President is using his executive authority to lead by example, and will continue to work with Congress to finish the job for all Americans by passing the Harkin-Miller bill. The bill would raise the Federal minimum wage for working Americans in stages to $10.10 and index it to inflation thereafter, while also raising the minimum wage for tipped workers for the first time in over 20 years.
-Businesses like Costco have supported past increases to the minimum wage because it helps build a strong workforce and profitability over the long run. Low wages are also bad for business, as paying low wages lowers employee morale, encourages low productivity, and leads to frequent employee turnover - all of which impose costs.
-Raising the minimum wage will make sure no family of four with a full-time worker has to raise their children in poverty. It has been seven years since Congress last acted to increase the minimum wage and, adjusted for inflation, today the real value of minimum wage is roughly the same as what it was in the 1950s, despite the fact that the typical American family's income has doubled since then. And right now a full-time minimum wage worker makes $14,500 a year, which leaves too many families struggling to make ends meet. Even after accounting for programs like the Earned Income Tax Credit, a family of four supported by a minimum wage worker still ends up living below the poverty line.
-Indexing the minimum wage to inflation would help lower-income workers keep up in the future. Since it was first established in 1938, the minimum wage has been increased 22 times, but was eroded substantially over several prolonged periods because of inflation. Democrats and Republicans agree that indexing the minimum wage to inflation would ensure that working families can keep up with expenses and will not suffer if Congress fails to act. Indexing would prevent a repeat of the 34 percent decline in the real value of the minimum wage from 1978 to 1989 and the 19 percent decline in real value from 1998 to 2006.
-Helping parents make ends meet. Around 60 percent of workers benefiting from a higher minimum wage are women. Less than 20 percent are teenagers. Also, those workers who would benefit from an increase in the minimum wage brought home 46 percent of their household's total wage and salary income in 2011. Raising the minimum wage directly helps parents make ends meet and support their families.
-Raising the minimum wage is good for government, good for business and workers and key to a stronger economy. A range of economic studies show that modestly raising the minimum wage increases earnings and reduces poverty without jeopardizing employment. Higher wages can also boost productivity, increase morale, reduce costs and improve efficiency.
-Across the country, Americans are saying it's time to raise the minimum wage. The President believes that it's time for action, and people across the country agree. Since the President called for an increase in the minimum wage in last year's State of the Union, five states have passed laws increasing their minimum wage. And many businesses, from small businesses to large corporations see higher wages as the right way to boost productivity and reduce turnover and therefore boost their profitability.
Source: The White House