Minimum Money, Maximum Debate: Congress Grapples with the Minimum Wage

What is a fair minimum wage? And who should be responsible for deciding it, employers or voters? What does it mean when people who work full-time still live in poverty?

These questions came to the surface once again as Congress discussed the raising the minimum wage on June 21, 2006.

About the minimum wage

The federal minimum wage is $5.15 an hour, which amounts to $10,712 a year for full time work.

That’s $900 above the poverty line for a single person, while a worker with two children falls $5,900 below that line.

According to the Bureau of Labor Statistics, 479,000 workers were reported as earning exactly $5.15 in 2005. Another 1.4 million were reported as earning wages below the minimum. Together, these 1.9 million workers with wages at or below the minimum made up 2.5 percent of all hourly-paid workers.

Opponents of raising the wage argue that most minimum wage earners aren’t supporting families on their own. Supporters argue that families are still affected -- 47 percent of earners in 2005 were married or had children.

Yet, minimum wage workers tend to be young, many still living with their parents. About half of workers earning $5.15 or less were under age 25, and about one-fourth of workers earning at or below the minimum wage were age 16-19.

The minimum wage has not increased since September 1997. Proponents of a higher wage point out that since it is not tied to inflation, it is worth less and less each year. The minimum wage is worth less today than at any time since 1955.

Party time

A higher minimum wage is an integral part of the Democrats platform, and some Republicans are considering it too. Representatives Ray LaHood (R-Illinois), David L. Hobson (R-Ohio), and Mike Simpson (R-Idaho) convinced House Majority Leader John A. Boehner (Ohio) to reconsider his decision to prevent a vote on the minimum wage this session. Now, the vote will come up soon and it will pass, LaHood says.

But the minimum wage tends to raise a hearty debate, and passage is far from certain.

Senate says no

On Wed, June 21, Senator Edward M. Kennedy (D-Massachusetts) proposed legislation that would raise the minimum wage from $5.15 per hour to $7.25 per hour, but with Senators voting along party lines, it failed 52-45.

The same day, Michael B. Enzi (R-Wyoming) proposed to raise the wage in stages to $6.25 an hour by 2007. It was defeated 45-53.

Clearly, there is strong opposition to raising the minimum wage, but why?

The debate

Ever since the minimum wage was first enacted in 1938 under Franklin D. Roosevelt, economists have argued over its efficacy.

Some believe that a federal minimum is necessary to a fair wage, while others say that it drives up labor costs and keeps unskilled workers out of the market. Those who frown at a federal minimum wage claim that it is an arbitrary number that ignores the market and local labor costs. They believe the market should decide.

Opponents add that raising the federal minimum wage could result in higher prices and inflation.

Additionally, business owners complain that a higher minimum wage will raise all labor costs, since a higher minimum bolsters all wages. Many say they cannot afford to pay their workers more and will cut jobs instead.

But supporters of a higher wage argue that raising the minimum will result in less job turnover, higher efficiency and greater productivity, all of which will save employers money.

States show the way

States can raise their minimum wages above the federal limit, and many have. Seventeen states and the District of Columbia require wages to be higher than the federal minimum and many are considering adjusting those for inflation. Often, minimum wage increases are approved directly by the voters.

What about a living wage?

A living wage is defined as the wage a full-time worker would need to earn to support a family above federal poverty line, ranging from 100% to 130% of the poverty measurement.

Over 70 localities have required employers to pay wages that are above federal or state minimum wage levels - a living wage ordinance. Only a specific set of workers are covered by living wage ordinances, usually those employed by businesses that have a contract with a city or county government. The rationale behind the ordinances is that city and county governments should not contract with or subsidize employers who pay poverty-level wages.

What do you think?

What is a fair minimum wage? Should it be different than a living wage? How much do you need to live on and how does that amount compare with the minimum wage? What do you think needs to happen with this issue?

Your input matters

Your representatives in Congress DO care what you think. Especially now -- 2006 is an election year and many representatives will be looking to reconnect with their constituents. Let your congressmen and women know what you think! Give your senators a piece of your mind! To find your reps, click here.

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Article Posted on: 6/27/2006