Posted tagged ‘President Obama’

Stagnant objections to minimum wage increases

March 7, 2013
Heather Gibney, Research Associate

Heather Gibney

Dialogue about increasing the minimum wage is finally emerging in 2013. President Obama proposed an increase in the minimum wage to $9.00 per hour in his State of the Union address, and Senator Tom Harkin and Representative George Miller have introduced the Fair Minimum Wage Act of 2013 — which would raise the minimum wage from $7.25 an hour to $10.10. The Harkin-Miller bill would raise the wage in three steps of 95 cents before indexing it to keep up with the rising cost of living.

Iowa’s minimum wage now matches the federal. Raising it to $10.10 per hour would put nearly $6,000 more dollars in the pockets of Iowa families, and for the first time since the late 1970s a single parent with two children would be above the federal poverty level — a wage gap that we should have seen diminishing over time, but have not.

poverty vs min wage

Recognizing that the federal minimum wage is too low, 19 other states, including the District of Columbia have a higher minimum wage than the federal and 10 states annually increase their minimum to keep up with the rising cost of living. Unfortunately, attempts to raise the federal minimum wage and set automatic adjustments to keep pace with the rising cost of living have been hindered by bad economics. Beliefs that increasing the minimum wage will lead to job loss, that the majority of those benefiting would be teenagers and that it would decrease output for certain industries is the consensus among opponents, however unfounded. A recent report from the Center on Economic Policy and Research (CEPR) looked at the most influential research done on the minimum wage in the last 20 years and continuously found insignificant or no discernible effects feared — and promoted — by opponents of raises in the minimum wage.

While the passage of any of these proposals remains uncertain, Iowans working for the minimum wage will have to get by with their creativity; possibly working two jobs, relying on cash assistance and tax credits, going without those amenities that make life a little more enjoyable and hoping that one day they might join the middle class.

Posted by Heather Gibney, Research Associate

Why the minimum wage matters

February 13, 2013
Heather Gibney, Research Associate

Heather Gibney

It doesn’t take long after someone proposes an increase in the minimum wage — as President Obama did in his State of the Union message — to hear the same, tired arguments against it.

Rather than repeat them, and the bad economics behind them, it’s important to put the minimum wage in the context of the cost of making ends meet. It doesn’t come close — which means two things: (1) the wage itself needs to keep pace with increases in typical household costs, and (2) to fill gaps between the wage and the cost of basic needs, and to encourage people to work, we can through public policy offer work supports, such as the Earned Income Tax Credit, as well as assistance with the costs of food, health care and child care.

The Cost of Living in Iowa analysis by the Iowa Policy Project last year provides a look at just how far short a $7.25 hourly wage would fall for a single parent even working two full-time jobs. It would not come close to paying the bills without work-support programs. Note these estimates in the accompanying table (Table 3 from that May 2012 report) of a basic-needs, no-frills household budget for a single-parent family of two or three.

120531-COL-Table3

The national minimum wage of $7.25 has not been increased in almost four years — and in Iowa it’s already been over five years, as the state’s $7.25 minimum took effect in January 2008. Prices are higher than they were then, and employers cannot be counted upon to raise pay for minimum-wage workers without the stick of wage-and-hour laws. That is why there’s a minimum.

Posted by Heather Gibney, Research Associate


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