The Minimum Wage – An Apolitical Blog

Some issues have outsized importance.

Do you remember that mix of uncertainty and excitement when you started your first full-time job? Your first day, when you had to show up at nine o’clock and stay until five in the afternoon, or some equivalent of a 40-hour work week? Do you remember the hourly rate of that first job? I’m imagining that many of you do, because a first job is a significant new phase of life, a milestone – one that marks independence, autonomy and authority over your own life.

My experience is a vivid memory. I was offered my first job in June 1967 – as a typing teacher at the Hickox Secretarial School in Boston. There was no bargaining about what my pay would be; it was simply presented to me. “And you will be paid two dollars an hour, which will come to $80 a week. And we pay at the end of each month.”

A rush of thoughts went through my mind – Wow, I have a job! was the first one because without that I would have been on the street. The second was a dilemma – How will I survive a whole month before I get my paycheck? which I figured I could resolve if I showed my letter of employment to the matron at the YWCA, the place I had chosen as home because I believed it was the safest and cheapest place to live. The third was a quick calculation that brought with it a sense of gratification – At least I’m making more than the minimum wage!, which I knew to be $1.40.

Congress created the national minimum wage in 1938, three years after President Roosevelt signed the Social Security Act into law. Both were products born of the economic devastation wrought by The Great Depression and neither legislation at the time included a cost-of-living adjustment.

The quadrupling of the price of oil in 1973 severely rattled through the economy, ratcheting up inflation, as measured by the Consumer Price Index (CPI), which reached 11% in 1974. Senior citizens raised an outcry as they watched the buying power of both their fixed pensions and their social security income eroded by soaring inflation.

When united around an issue, senior citizens carry immense sway with politicians because they constitute a strong and reliable voting bloc. Congress heeded the protests of its elderly constituents and in 1975 it passed legislation that attached an automatic annual Cost of Living Adjustment (COLA) to social security payments that was pegged to the CPI. The change produced significant annual increases in income – as much as 14% in 1981 and 11% in 1982.

On the other hand, most of the workers who receive the federal minimum wage are either young (it being their first job) or unskilled – neither of whom wield political clout. That lack of voice has cost them dearly. Had Congress provided the same annualized cost-of-living benefit to the minimum wage in 1975, when the hourly rate was $2.10, it would be $10.54 today, 45% higher than the current $7.50. Tragically, it’s closing on twelve years since the federal government has approved any increase to the rate.

The obvious problem with a national minimum wage is that it cannot reflect the vast divergence in regional variations in the cost of living across the country. Fortunately, only twenty states currently follow the federally mandated minimum hourly wage – the rest have adopted higher rates. Importantly, too, many cities have legislated rates above their own state’s minimum, reflecting the need to more realistically reflect local economic conditions.

It is encouraging to note that today less than 2% of hourly workers in America are paid the federal minimum wage, a significant decline from around 15% in the early 1980s. Still – that two percent of workers need to be dignified with a minimum wage that doesn’t automatically relegate them to poverty and make them beholden to Government handouts.

Corporate America, particularly the retail industry, (think: Walmart, Home Depot, Amazon, Lowes, Target) has been instrumental in adopting and promoting starting hourly wages well in excess of the current federal minimum. In addition, those companies (and many more across the country) offer health care benefits and employee stock purchase plans that not only cover medical needs, but also allow employees to build wealth for their retirement.

In a country as prosperous and successful as ours, it seems unconscionable to be allowed to pay a wage so low that a hard-working employee is required to seek government assistance in order to have minimally adequate food, shelter and clothing. Regrettably, that is the current situation with a federal minimum hourly wage still stuck at $7.50.

So, what is the right and fair minimum hourly rate? Senator Joe Manchin is correct when he opposes a doubling in the federal minimum wage to $15 per hour. A state like West Virginia, (which he represents) already pays 17% more than the federally required rate but would face serious economic consequences if forced to pay $15 per hour.

Sometimes a measure of common sense goes a long way and it seems to me that somewhere between $10.50 and $11.00, approximately the inflation-adjusted rate since 1975, would preserve the real purchasing power of the minimum wage. States and cities would be free, as they are now, to set their own higher rates. Adding an annual COLA tied to the CPI would provide additional security against inflation creep and would solve the problem of making the minimum hourly wage a political football every decade.

Let’s remember - the ultimate purpose of a decent minimum wage is to allow a person to live in dignity.