Minimum wage: Falling behind

Congress last raised the minimum wage in 1997 when it established the current $5.15 per hour. In the years since, inflation has reduced its purchasing power until, unless Congress acts in the meantime, the value of the minimum wage, measured in inflation-adjusted dollars, will fall to $4.82 by 2004.

Should that happen, the minimum wage would be lower than in all but one year (1989) since 1955. In today’s terms, it would require an hourly rate of $7.52 for the minimum wage to equal its purchasing power of 1968.

Measured another way, during the 1960s and 1970s the minimum wage allowed a worker who worked full-time year-round to earn enough to lift a family of three above the poverty line.

In 2001, that same worker fell nearly $3,500 below the poverty threshold of $14,129, while a family of four fell nearly $7,500 below.

It would require a minimum wage of $6.80 an hour to close the gap for a family of three and $8.71 to raise a family of four above the poverty line The federal minimum wage, first set at $.25 per hour by the Fair Labor Standards Act (FLSA), has been a fact of life for U.S. workers since Oct. 24, 1938.

Failure of Congress to enact an increase in the minimum wage has prompted a shift in the campaign for government intervention to raise the wages of low-paid workers.

Sparked by a coalition of labor unions and community organizations, the campaign has taken advantage of a provision in the FLSA that allows states – and, by extension, local governments – to enact minimum wage laws, providing only that they not be inconsistent with federal standards.

Most states have adopted such laws, although many simply track FLSA language. Others are broader, including workers not covered by the federal standard and/or setting a higher minimum. To date, 11 states and the District of Columbia have established a minimum wage higher than that provided for under the FLSA, with rates ranging from $5.65 in Alaska to $6.90 per hour indexed to inflation in Washington.

In the years since a coalition led by the American Federation of State, County and Municipal Employees won the nation’s first living wage ordinance in Baltimore in 1994, the movement has mushroomed, with similar ordinances in some 70 cities and counties across the country.

The two latest victories came last month. The first came Feb. 2 when New Orleans residents approved a measure mandating a minimum wage of $6.15 per hour. The measure, which carried by a 63-37 percent margin, means that 68,000 workers – a third of the city’s work force – will get a raise May 2 when the law goes into effect.

Although its minimum is lower than those established in other jurisdictions, the New Orleans wage is unique in that it requires all businesses in the city to pay the new rate, rather than being limited to contractors doing business with the city.

The second came Feb. 28 when the county council of Montgomery County, Md. approved legislation requiring contractors doing business with the county to pay their workers $10.50 an hour. Public opinion polls taken over the last several months show overwhelming support for increasing the minimum wage by at least a dollar an hour:

• A January 2002 poll by the Ms. Foundation found 77 percent of likely voters in favor of raising the minimum wage to $8 per hour.

• A poll undertaken for Investor’s Business Daily and the Christian Science Monitor in November 2001 found 75 percent of respondents supporting an increase in the minimum wage as a way to stimulate the economy.

• In a January 2001 poll by Peter Hart Research Associates, 83 percent of respondents favored increasing the minimum wage by $1. When asked to imagine that they could vote on issues on Election Day, 82 percent of respondents in an October 2000 Gallup Poll said they would vote to raise the minimum wage by $1.