It’s that time again — raise the minimum wage!

Added August 14th, 2012 by Peter Ruark | Print This Entry Print This Entry | Email This Entry Email This Entry
Peter Ruark

The federal minimum wage would rise to $9.80 by July 2014 under bills introduced by U.S. Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-CA. The Economic Policy Institute today released a report showing that the minimum wage affects far more than teen workers in Michigan.

Among the findings:

  • 44% of those who would directly and indirectly benefit from the proposed increase work full time.
  • Parents make up 27% of those affected, and 26% of those parents are the sole providers of income for their families.
  • 86% are 20 years old or older, putting to rest the often-heard claim that minimum wage increases benefit primarily teenagers.

Readers may remember when, in 2006, the Michigan Legislature raised the state minimum wage to $7.40 in three steps. Several months later, Congress raised the federal minimum wage to $7.25 in three steps, but since the federal minimum wage is lower than the state minimum wage, the state wage takes precedence.

Each year that the minimum wage is not increased, it loses some of its purchasing power due to inflation. Using the Bureau of Labor Statistics’ CPI Inflation Calculator , I calculate that when inflation is taken into account, $7.40 in 2012 is the equivalent of $6.94 in 2008, the year the final step of the increase took effect. That means a worker working full time year round (40 hours per week and 52 weeks per year) at minimum wage is earning $957 dollars per year less than in 2008 after taking inflation into account.

A bit of history  about the 2006 minimum wage campaign may be helpful here. The ballot initiative to raise Michigan’s minimum wage included an annual increase for inflation, as many other state minimum wages have. Because the ballot initiative was proving popular with voters, minimum wage opponents in the Legislature hurriedly passed a minimum wage increase slightly higher than the one in the ballot initiative, but without the annual increase for inflation.

If that annual increase were in place, the minimum wage would currently be $7.89 per hour. If either the  1978 or 1974 federal minimum wage increases had included an annual increase for inflation that stayed in place up to this day, the minimum wage would now be $9.33 per hour. If the 1968 legislation had done so, the minimum wage would be $10.55 per hour.

Let’s not let the minimum wage grow weaker each year. If this federal minimum wage proposal does not pass, let’s begin thinking about raising Michigan’s state minimum wage.

– Peter Ruark

4 Responses to “It’s that time again — raise the minimum wage!”

  1. William Kerkstra says:

    Peter, do you believe while trying to make wages more fair, that we are simultaneously making them unfair for employers? By raising the minimum wage to compete with inflation, are we only treating the symptoms, not the cause of inflation, example, central economic planning and debasement of the dollar?

  2. Randy Block says:

    It’s about time that the minimum wage are increased!Currently, the average pay of Fortune 500 CEO’s is 380 times greater than the average worker (For more info, go to: http://www.aflcio.org/Corporate-Watch/CEO-Pay-and-the-99.) This wage disparity happened without “central economic planning”. A mother with two children working full time at the current minimum wage of $7.40/hour would earn $15,392/year, just barely above the 2012 poverty guidelines ($15,130) for family of three.

  3. [...] Peter Ruark blogged about the minimum wage in August. He wrote: [...]

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