Action Alert

Combating Income Inequality: Raising the National Minimum Wage

Combating Income Inequality: Raising the National Minimum Wage
Minimum wage rally in Maryland.

“Our country has the highest proportion of low-wage workers of any developed country — people who work hard but earn less than $10.50 an hour and are barely able to make ends meet.” –Raymond C. Offenheiser, President of Oxfam America

The United States economy is seeking to regain its strength following the 2008 ‘Great Recession,’ as thousands of Americans throughout the country remain unemployed or underemployed. Applications for food stamps and supplementary assistance are at record highs; one third of Americans are considered to be among the “working poor;” and according to recent Census data, roughly 15 percent of American citizens are living in poverty. That’s over 46 million Americans who cannot make their ends meet. Domestic workers are facing longer hours, lower wages and increasing job insecurity.  The income gap between the United States’ wealthiest citizens and its poorest has expanded and is at its widest since the Great Depression.

On the Backs of Women and Children

A disproportionate amount of the burden of poverty in the United States falls upon the backs of women, children and minorities. In fact, women and children make up over half of the poor population in the United States. The Center for American Progress reports that in 2008, the poverty rates for women exceeded that of men across every category. Women working full time, year round typically make only 77 percent of what their male counterparts make – leaving a wage gap of 23 cents on the dollar. One reason for this gap is that women are concentrated in low-wage jobs: two-thirds of minimum wage workers and workers in tipped occupations are women, disproportionately women of color. Despite laws requiring equitable treatment for employees regardless of gender, religion or ethnicity, women continue to be discriminated against by being paid less than men for the same work. And since women more often than not are the primary caregivers, they must cope with the additional stresses of trying to provide for a family on a limited and undervalued income.

Calls to Raise the Minimum Wage

In light of the growing problem of poverty and income inequality in the U.S., calls to raise the national minimum wage have galvanized discussion on Capitol Hill. Advocates claim raising the minimum wage would help close the growing income inequality gap by increasing wages for workers at the bottom of the spectrum. Opponents say raising the minimum wage would hurt the nation’s economic recovery and only benefit a few. An indisputable fact is that women represent nearly two-thirds of minimum wage workers, and full-time, year-round work at the federal minimum wage of $7.25 an hour leaves a woman with two children thousands of dollars below the poverty line. According to Oxfam America, 65 percent of Americans believe the federal minimum wage should be set at a level that insures a living wage. Judging from the recent decisions to raise the minimum wage in states like New Jersey and California and the push to do the same in cities such as SeaTac, Washington, it’s fair to say many Americans support the idea of increasing the federal minimum wage. “We need this new law to raise the minimum wage because it would change the law for tipped workers so that they would get 100 percent of the minimum wage. We shouldn’t have to depend on something as unreliable as tips to survive,” exclaims Jenna S., a waitress in Alton, Illinois.

Recently, the District of Columbia’s city council unanimously voted to incrementally increase the city’s minimum wage to $11.50/hour by July 2016; following suit with neighboring Montgomery and Prince George's counties in Maryland. Although D.C.’s current mayor Vincent Gray has said he would like to see a smaller increase — in the range of $10/hour — Gray signed the bill into law on January 15, giving District workers one of the nation's highest minimum wage allocations. The national minimum wage program dates back to the signing of the Fair Labor Standards Act (FLSA) in 1938 by President Franklin D. Roosevelt. The FLSA was introduced to protect American workers from being exploited and put in place a mandatory minimum wage of 25 cents per hour, with the expressed purpose of maintaining a “minimum standard of living necessary for health, efficiency and general well-being, without substantially curtailing employment.” October 24, 2013, marked the 75th anniversary of the establishment of the federal minimum wage, however the commemoration was bittersweet. While the anniversary signaled 75 years of federal assurances of a national minimum wage for full-time workers, it also highlighted that the current 2013 minimum wage of $7.25 is the equivalent of what it was in 1950 after adjusting for inflation. The federal minimum wage has lost 30 percent of its purchasing power in recent decades. If the minimum wage had kept pace with the cost of living since 1968, it would approximately be at $10.56. As the number of working poor in the United States increases, it would seem that the national minimum wage has not kept pace with changing economic times and at its current rate cannot adequately protect women and families from the effects of poverty.

Obama's Pledge

Five years following his first proposal on the issue, President Obama has once again pledged to raise the federal minimum wage for government contractors from its current rate of $7.25 per hour to $10.10 per hour by January 2015. The increase would be phased in over time and be indexed to inflation. He made the announcement during his latest State of the Union address, and the White House has hailed the initiative, stating that if it becomes law it would help boost the incomes of over 15 million Americans. In his address, President Obama emphatically stated, "Tonight, let's declare that in the wealthiest nation on Earth, no one who works full time should have to live in poverty. This single step would raise the incomes of millions of working families… For businesses across the country it would mean customers with more money in their pockets.” The President vowed to take action with or without the support of Congress, and he recently followed through with his promise by signing an executive order establishing a $10.10 federal minimum wage increase to take effect by next year.

Some critics of President Obama’s federal wage increase assert that he is abusing his federal procurement powers and may face legal challenges to his order; however, similar actions taken by former Presidents (Clinton and Carter) have been upheld in the courts. Additionally, studies conducted by the Federal Reserve Bank of Chicago in 2011 support the President’s claim — showing that a $1 hike in the minimum wage rate increases spending by $2,800 a year in households with minimum wage workers. "One of the best ways to get the economy going again is to put money in the pockets of people who work, who will spend it at small businesses in their communities,” states Christine L. Owens, executive director of the National Employment Law Project. In 2008, the President made his initial pledge of increasing the federal minimum wage to $9.50 by 2011; but it is now apparent that pledge did not come to bear fruit.

Key Legislation

Earlier in 2013, House Representative Donna Edwards introduced the Working for Adequate Gains for Employment in Services Act (or WAGES Act). The act calls for an amendment to the FLSA to establish a base minimum wage for tipped employees of at least: (1) $3.75 an hour beginning 90 days after the enactment of this act; (2) $5.00 an hour beginning one year after the change in clause one takes effect; and (3) beginning two years after the change in clause two takes effect, and adjusted as necessary thereafter, 70 percent of the wage in effect under FLSA, but in no case less than $5.50 an hour. The act has since been referred to subcommittee, and raising the minimum wage and the tipped minimum wage are important first steps toward fair pay for women – especially women of color.  House Representative George Miller introduced H.R. 1010: Fair Minimum Wage Act (2013) early last year, which seeks to raise the national minimum wage to $10.10/hour and the hourly wage for tipped workers to $3.00/hour. Both of these key pieces of legislation are still pending, but hopefully with the momentum of President Obama’s executive order and the support of our members, we can take significant steps towards closing the income gap and making a living wage a closer reality for all American workers.

Posted or updated: 4/21/2014 11:00:00 PM

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Take Action

  • Contact your Congressional representative (Congressional Switchboard: 202-224-3121) and urge them to follow the President’s lead by putting their support behind bills such as H.R. 650: The WAGES Act, and H.R. 1010: The Fair Minimum Wage Act (2013), to ensure a better income for over 15 million deserving Americans.
  • Watch the PBS segment on one woman’s struggle to survive on a fast food salary.
  • Share with us your stories of how families in your communities are coping with low-wage work by posting on our Facebook page.
  • Read “Global Living Wage,” #4060, pages 575-576; and “Rights of Workers,” #4135, pages 609-614, in The Book of Resolutions of the United Methodist Church (2012).