There are at least four major economic issues facing this country: high unemployment; low wages; the growth in poverty; and the obscene level of income and wealth inequality that keeps getting worse. One important way to address all of these problems is for Congress to substantially increase the minimum wage.
Since 1968, the real value of the federal minimum wage has fallen by more than 30 percent. If the minimum wage had kept pace with inflation since 1968, it would be worth more than $10.70 per hour today.
Raising the minimum wage to $10.10 an hour would increase the pay of nearly 30 million Americans, enough to lift a family of three out of poverty. Despite what opponents of raising the minimum wage suggest, almost 90 percent of Americans who would benefit from raising the minimum wage are adults over the age of 20.
The last time Congress raised the federal minimum wage was in 2007 when George W. Bush was president. As a result, the minimum wage was gradually raised from $5.15 to $7.25 an hour where it has been stuck since July of 2009. Since then, many of the new jobs being created have been low-wage and part-time. While millions of Americans are working longer hours for lower wages, the prices they pay for food, gasoline, medicine, housing and almost everything else have gone up.
Meanwhile, as the middle class continues to shrink and we have more people living in poverty than at any time in our history, the people on top are doing phenomenally well. Since 2009, CEOs in America's most profitable corporations received a 42 percent pay raise, an astronomical 354 times more than their average worker. According to the latest study, between 2009 and 2012, 95 percent of all new income went to the top 1 percent. Boosting the minimum wage to at least $10.10 an hour would be a modest but important step forward in reversing the record level of income inequality that is plaguing this country.
Increasing the minimum wage will also create jobs. According to the Economic Policy Institute, raising the minimum wage to $10.10 an hour will generate 140,000 jobs, expand the economy by more than $32 billion and increase the take-home pay of Americans by nearly $52 billion. When low-wage workers get a raise they spend their extra money at local grocery stores and small businesses throughout the country. That increases demand for products which boosts the entire economy.
This is an extremely important point. While unemployment is going down, the percentage of working-age Americans who have a job is the lowest it has been in 35 years. Counting those who have given up looking for work and those who are working part-time because they can't find a full-time job, the real unemployment rate is 13.2 percent, much higher than the "official" 7 percent rate implies.
And let's be clear: most of the 8 million new private sector jobs that have been created over the past 45 months are low-wage jobs in fast-food restaurants, bars, department stores, malls, hotels, and other low-wage industries. Meanwhile, six out of the ten jobs lost during the Great Recession were decent-paying jobs that paid up to $21 an hour.
Ironically, not only would increasing the minimum wage boost the economy and narrow the gap between the rich and the poor, it would also reduce the deficit.
Today, tens of millions of Americans working in Wal-Mart, McDonald's, Burger King and other multi-national corporations are being paid wages so low that they need food stamps, Medicaid, public housing, and other forms of government assistance just to survive. In fact, American taxpayers are subsidizing the poverty level wages of some of the largest and most profitable corporations in America at an annual cost of $283 billion a year from 2008 to 2012.
To understand just how absurd this situation has become, just take a look at what's going on at Wal-Mart. The owners of Wal-Mart, the Waltons, are the wealthiest family in America worth more than $144 billion. Incredibly, the Walton family owns more wealth than the bottom 40 percent of Americans. Yet the average Wal-Mart associate makes less than $9 an hour. This means that in order to feed their children, get adequate health insurance and put a roof over their heads, many Walmart workers have to rely on taxpayer assistance from the federal government. Nearly half of the children of Wal-Mart associates are either on Medicaid or uninsured, and Wal-Mart has the highest percentage of employees receiving food stamps in several states in this country. American taxpayers should not have to subsidize the low wages at Wal-Mart to make the richest family in America even wealthier. That is not only morally grotesque, it is bad economic policy.
The working families of America are struggling. Raising the minimum wage will not solve all our economic problems. It will, however, be an important step forward. Let's do it.