President Obama’s Minimum Wage Misfire
Dear Mr. President:
Somebody probably should’ve told you this, but $9-an-hour is still a really crappy wage.
I’m glad you thought about the nation’s poorest workers during your State of the Union speech on Tuesday night, and I’m glad you want to take some steps to permanently raise the federal minimum wage from its current $7.25-an-hour rate. But $9 is still, well, a really crappy wage—and it probably won’t solve the problem you aim to fix.
The problem? Workers in poverty. Here’s what you said in your speech:
We know our economy is stronger when we reward an honest day’s work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong. That’s why, since the last time this Congress raised the minimum wage, nineteen states have chosen to bump theirs even higher.
Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour. This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead.
You’re completely right in that first paragraph—today’s minimum wage works out to $14,500 a year for a full-time worker, and that’s assuming they take two weeks of vacation at some point in the year. According to the federal government’s poverty guidelines for 2013, that income doesn’t even rise to the poverty level for a family of two—say a single mother and a child: You’d have to earn $15,500 a year to reach that lofty status.
So what does $9-an-hour work out to? Well, it’s more. Assuming that same two weeks of vacation is still in play, your full-time worker making the minimum would see their annual wages rise to $18,000. That brings the single mother and her child above the poverty rate—a laughable thought, if you consider what it would be like to live on that meager amount—but a “family with two kids?”
Nope. Assuming that’s one parent with two kids, your new wage still falls below the government’s poverty line of $19,530 for a family of three—and well below the $23,550 line for a family of four.
Yes, that additional money would buy some more groceries, or make rent more achievable. But mostly what it would do would take a working family in poverty and … keep them in poverty.
If you’re wanting to lift the poorest workers out of those depths, bolder action is needed. To equal the poverty line for the aforementioned family of four, the minimum wage would have to be closer to $11.78 an hour.
Here’s the truth, Mr. President: You probably already know that $9-an-hour doesn’t cut it. (One “living wage” calculator suggests that a family of four in Philadelphia needs the “sole provider” to earn nearly $20 an hour just to meet the family’s basic needs.) You did, after all propose raising the minimum wage all the way to $9.50 an hour, way back in 2008. That would’ve been $10.13 in 2012 dollars—still not quite sufficient, but much closer to meeting the poverty mark. Of course, it never happened—Congress hates to raise the minimum wage—so maybe you’ve felt the need to backtrack.
Minimum wage votes are always tricky. There’s plenty of evidence to suggest that wage increases don’t, as opponents say, increase the unemployment rate. Of course, there’s also evidence that the minimum wage doesn’t do all that much to reduce poverty, either.
Then again, we don’t often have a minimum wage set north of the poverty line. That might make a difference. $9 an hour isn’t an awful raise, Mr. President, but it won’t lift workers out of poverty. You need to raise the ante.