Minimum wage sinking — not ‘stuck’

New analysis from the Economic Policy Institute illustrates just how much we underestimate the impact of inaction on the minimum wage when we talk of it being “stuck,” “frozen,” or “held down,” at $7.25.

In reality, as EPI’s David Cooper shows, the wage actually declines year by year, because its buying power doesn’t keep pace with inflation. The $7.25 national minimum wage that took effect in 2009 would be $8.29 in today’s dollars. Put another way, the value of the minimum wage has declined 12.5 percent since Congress last raised it.

For Iowa, the situation is even worse, because the Iowa Legislature passed and Governor Chet Culver signed a $7.25 minimum wage that took effect a year and a half before the national increase. When the Legislature returns in January, it will have been 10 years since the last minimum-wage increase, while costs to families have kept rising.

EPI also points out that at its high point in 1968, the federal minimum wage was equal to $9.90 in today’s dollars. Tie it to increases in average wages, and the figure is $11.62. Tie it to productivity, and the figure is $19.33.

Click the link below for an interactive version of the above graphic:
http://www.epi.org?p=132305&view=embed&embed_template=charts_v2013_08_21&embed_date=20170802&onp=132309&utm_source=epi_press&utm_medium=chart_embed&utm_campaign=charts_v2

It seems settled in the current political environment that our minimum wage is stuck — there’s that word — at $7.25. There is no movement in either Des Moines or Washington to raise it, even though 29 states currently are above that level, including all but Wisconsin among our neighbors.

In fact, the state of Iowa forced repeal of local minimum wages where counties and cities demonstrated leadership that our legislative leaders could not, as those state leaders pandered to ideological myths and political talking points from an entrenched and bullying business lobby.

A $7.25 minimum wage is indefensible. Businesses paying at or near that wage benefit from the economy that taxpayers support through public services, not the least of which are law enforcement, fire protection and streets, let alone an educated work force. Yet they insist that we ask nothing in return, while their workers toil at wages so low they need other public supports — in food, health care, housing and energy assistance, all threatened by the current administration in Washington — just to keep their families going.

Think you’re done hearing about the minimum wage? Not if we can help it.

Mike Owen, executive director of the nonpartisan Iowa Policy Project

mikeowen@iowapolicyproject.org

Author: iowapolicypoints

The Iowa Policy Project is a nonprofit, nonpartisan organization that provides research and analysis to engage Iowans in state policy decisions. We focus on tax and busget issues, the Iowa economy, and energy and environmental policy. By providing a foundation of fact-based, objective research and engaging the public in an informed discussion of policy alternatives, IPP advances effective, accountable and fair government.

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