There are many important issues on the national political table right now, but sometime soon, fixing the federal minimum wage should be there too. Of course, the politics of reform don’t look good, but there is a Congressional election coming next year, and we need to be sure that voters understand that almost every Republican in Congress (some Democrats too), and the self-proclaimed workers’ champion in the White House don’t think people deserve a helping hand to get a living wage. The current federal minimum wage, $7.25 an hour, is a disgrace. Even $10 an hour yields only $20,800 for year-round, full-time work. That’s below the extra-low American poverty line for a family. Even for an individual living alone, it would not be enough in most American cities.
But how high a wage should we push for in the long run? Of course, $15 an hour is a great starting point and courageous workers and local politicians have succeeded in getting a $15 minimum or something like it in quite a few states and cities. Two years ago, 42% of American workers were earning less than $15 an hour, so movements that are winning a $15 minimum in states and cities are helping millions and millions of workers.
But workers in other states and cities need federal help. Getting a $15 national minimum wage would be a tremendous victory. But just the beginning. In the not-so-long run, $15 an hour won’t be enough. That’s because $15, while a huge advance for millions of workers, yields only $31,000 before taxes for a full year of full-time work. And many low-wage workers do not work full-time.[1]
If we are debating with people who think $15 is terribly high, can we defend something higher? What would be an ideal minimum down the road? There are several ways to construct an ideal minimum wage, but two approaches are particularly compelling. One is about minimum living standards and the other is about equality. As to the first, we can ask how much a family needs to live, not in affluence, but in modest comfort. Experts have estimated that a two-parent, two-child family requires $54,500 a year for a modest living standard. (The amounts vary by where the family lives and household size.) If there is only one earner, he or she must work full-time all year and earn $26 an hour to reach $54,500.[2]
Next, if we apply the equality method, it seems a matter of elementary justice that everyone should share increases in the national income. To estimate how much income did not go to the people, we can use per capita income-the total national income divided by the population. Per capita income increased 16 times between 1965 and 2015. But average hourly pay increased only half as much. One reason is that a tiny group of “capitas”-the rich-seized most of the increase in the national income. If the hourly wage of the average rank-and-file worker had increased as much as per capita income, it would be $40 today, not $21. If the federal minimum wage of 1965 had increased by a factor of 16, it would be $20 an hour, not $7.25.[3]
In light of these facts, it is astonishing that many politicians on the national scene are happy with the pathetically low minimum of $7.25. This indifference to the working poor occurs while big bankers and business tycoons take home massive compensation packages of millions and even billions of dollars.
One wonders what the President’s working-class supporters expect of him on the wage front. He likes to visit factories and talks big about job creation, but it tells us something about what he really thinks of the working class that he, his appointees, and Congressional members of his party, are fine with a $7.25 national minimum wage, do not support the $15 movement, and would be horrified if we dared to talk about a minimum wage that started at $20.