Fed­eral min­i­mum wage stuck at $7.25/hour since July 2009

Baltimore Sun Sunday - - MARYLAND - By Jeff Stein

WASH­ING­TON — Amer­ica has now gone longer with­out an in­crease in the fed­eral min­i­mum wage than at any point in the law’s eight-decade his­tory.

In July 2009, al­most 10 years ago, the fed­eral min­i­mum wage rose from $6.55 an hour to $7.25 an hour.

Since then, Congress has not ap­proved any ad­di­tional hikes, with Repub­li­can law­mak­ers re­ject­ing Democrats’ at­tempts to raise the min­i­mum wage.

Kevin Has­sett, chair­man of the White House Coun­cil of Eco­nomic Ad­vis­ers, said he and Pres­i­dent Don­ald Trump have not dis­cussed the ad­min­is­tra­tion’s po­si­tion on rais­ing the fed­eral min­i­mum wage.

Trump has backed a num­ber of po­si­tions on the min­i­mum wage, say­ing at one point dur­ing the 2016 pres­i­den­tial cam­paign that he sup­ported sig­nif­i­cantly in­creas­ing it and at oth­ers that he would not lift it.

Twenty-nine states have passed state min­i­mum wages that are higher than the fed­eral base­line, while in the other 21 the fed­eral min­i­mum pre­vails.

Repub­li­can-con­trolled states are less likely to have passed min­i­mum wage hikes, al­though vot­ers in con­ser­va­tive-led states such as Arkansas and Alaska have ap­proved higher min­i­mum wages through bal­lot ini­tia­tives.

“We’ve had Congress upon Congress that can’t get it done, so we’re stuck with this shame­ful num­ber,” said Judiy Conti, gov­ern­ment af­fairs di­rec­tor for the Na­tional Em­ploy­ment Law Project, which ad­vo­cates a higher fed­eral min­i­mum wage.

Ex­perts say the re­cent strong run of U.S. eco­nomic growth over the past sev­eral years bol­sters the case for rais­ing the min­i­mum wage, given that busi­nesses are bet­ter po­si­tioned to sur­vive the rise in costs than they are dur­ing a down­turn.

Wages have be­gun rising for U.S. work­ers as low un­em­ploy­ment im­proves their bar­gain­ing power, but some econ­o­mists ar­gue they would in­crease even faster with min­i­mum wage hikes.

The “ef­fec­tive” min­i­mum wage — the av­er­age wage be­ing paid to all min­i­mum wage work­ers — has surged to $12 an hour, largely due to state and lo­cal gov­ern­ments’ hikes, ac­cord­ing to a re­port in The New York Times by an econ­o­mist who served in the Trea­sury Depart­ment under Pres­i­dent Barack Obama.

But about 700,000 min­i­mum-wage work­ers, in ar­eas that have not passed lo­cal in­creases, are still paid $7.25 an hour, the re­port said.

The value of that wage has fallen by about 17 per­cent over the past decade, ac­cord­ing to the Eco­nomic Pol­icy In­sti­tute, a left-lean­ing think tank, which trans­lates into a $3,000 loss in an­nual earn­ings for a full­time year-round min­i­mumwage worker.

“Busi­ness prof­its have been steadily grow­ing, and it’s much eas­ier to ab­sorb what busi­nesses view as neg­a­tive eco­nomic shocks when the over­all con­text is pos­i­tive and good,” said Steven Kyle, an econ­o­mist at Cor­nell Univer­sity. “That’s been true for the last five years.”

Has­sett, of the pres­i­dent’s eco­nomic team, pointed to re­cent wage growth at the bot­tom of the income distri­bu­tion and ar­gued the Repub­li­can tax law had helped bolster pay for low-income work­ers.

In Novem­ber 2018, White House Na­tional Eco­nomic Coun­cil di­rec­tor Larry Kud­low called the min­i­mum wage a “ter­ri­ble idea” and “silly,” ar­gu­ing it hurts small busi­nesses by in­creas­ing their costs.

“The best way to in­crease wages is to en­cour­age cap­i­tal for­ma­tion, in­crease pro­duc­tiv­ity, and drive the equi­lib­rium wage higher,” Has­sett said.

Democrats in Congress have faced in­ter­nal di­vi­sions over how high to raise the min­i­mum wage, with the party’s liberals and much of the 2020 pres­i­den­tial field push­ing for a $15 an hour min­i­mum wage.

Mod­er­ate Democrats in Congress have pushed small in­creases in the fed­eral min­i­mum wage that would vary by re­gion, with the wage floor rising by smaller amounts in poorer ar­eas.


Much of the 2020 pres­i­den­tial field, in­clud­ing Sen. Ka­mala Har­ris, is push­ing for a $15 an hour min­i­mum wage.

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