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August 12 2019

The Federal Minimum Wage Basically Doesn’t Matter Anymore

by Patrice Lee Onwuka

Less than one percent of American workers earn $7.25 an hour today, the current federal minimum wage. Employers are raising pay, states are increasing their minimum wages, and the strong economy is finally driving wage rates higher leading to wage gains for workers.

So why are federal lawmakers pushing to raise the federal minimum wage to $15 an hour --a proposal that would kill 1.3 million jobs?

According to new federal data reported by the Wall Street Journal, only about 430,000 workers out of 156 million U.S. workers earn $7.25 an hour. That’s just 0.28 percent. In addition, these are mostly young people -- think of high school and college students looking to gain skills, experience, and a start to their career.

Yet, the way federal lawmakers were discussing the issue recently, you would think that most of the workforce comprise our lowest-paid workers. 

When the Democratically-led House of Representatives voted to raise the federal minimum wage to $15 an hour last month, one of their talking points was that this is the longest period since it had been raised.

Given that over time fewer and fewer workers still earn $7.25 an hour, it’s a sign that there’s no need for Congress to step in.

There are several reasons that the number of federal minimum wage workers is shrinking almost into oblivion: employers are raising wages, a tight jobs market is pushing wages higher, and states are raising their minimum wages above the federal level.

Walmart, Target, Amazon, and many other major retailers have in recent years hiked their wages to $15 an hour or close to it. This has triggered a fight to attract low-wage workers leading competitors to raise their wages as well. 

Nearly two out of three workers (60 percent) of the workforce live in the 29 states with minimum wages above the federal minimum. Although 21 states currently still follow the federal minimum wage, their citizens may still earn above the minimum. States have been developing strategies such as regional minimum wages or tiered minimum wages to help areas outside of metropolitan areas, which cannot afford $15 an hour or higher wages to still compete for workers.

If the U.S. Senate decides to pass the $15 an hour federal minimum wage, it will trigger massive job losses to the tune of 1.3 million or more according to the nonpartisan Congressional Budget Office.

Before we clap for states to push for $15 an hour look at the impacts in New York City, in addition to job losses workers have had their hours reduced or being replaced by automation. Customers are seeing menu price increases. Some employers are forgoing expansion and others shutting their doors.

Even presidential candidate Bernie Sanders had to cut staff hours to afford to pay his workers $15 an hour.

If less than half a million workers are earning $7.25 and that number continues to fall, it seems reasonable to leave it alone and allow the market to determine wages. 

Advocates and activists aren’t letting go of the fight though. 

At $7.25 an hour there are no job losses, but wage gains. At $15 there would be pay increases for some, but massive job losses for many. Facing that tradeoff, we have to ask why Congress would still choose to push for a higher federal minimum wage?





Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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