Federal Minimum Wage Increases — But Hold the Champagne

David Moberg

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There’s reason to celebrate on Friday, when the federal minimum wage increases from $6.55 to $7.25.

About 4.5 million workers in 31 states will take home a bigger paycheck, and employers are likely to boost the pay of at least another 1.6 million just above the minimum wage, according to the Economic Policy Institute.

The other 19 states and the District of Columbia had already enacted minimums of $7.25 an hour or higher.

The increases should stimulate the economy, according to a new study
from the Chicago Federal Reserve Bank, and put a small dent in the growing inequality and poverty, but won’t likely increase unemployment.

Most of all, it will help the lives of a vulnerable population – mainly adults,
disproportionately minorities and women, who are the principal
breadwinners in their families, EPI reports.

But keep the celebration muted. The increase falls far short of what’s
needed. The real value of the minimum wage is still 17 percent lower
than in 1968, only 39 percent of the average nonsupervisory production
worker wage (and well below the ratio from the 1950s through the 1970s).

While the real minimum wage has shrunk, the typical minimum wage worker
has more education than her counterpart 30 years ago – and presumably
higher productivity, according to an analysis by EPI economists Andrew
Green and Heidi Shierholz.
In today’s dollars, workers in 1979 — 58 percent with a high-school degree
or more — made $8.02. But 72 percent of minimum wage workers now have
that level of education but less income.

And even with the new increase, the U.S. minimum wage lags far behind
Western European countries. In Britain, the minimum is $9.43 an hour. In
France, it’s $12.54. And both countries provide health insurance for
everyone through a national, public system.

Winning all that might justify a real party.

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David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.

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