Minimum wage is not a living wage
Published in the July 24, 2014 Santa Maria Times.
The minimum wage in California increased from $8 to $9 per hour on July 1, and will go to $10 on Jan. 1, 2016.
The federal minimum wage remains at $7.25 per hour. A bill to increase it to $10.10 was defeated in April due to a filibuster by House Republicans.
In the Santa Maria area, with its high concentration of jobs in the low-wage sectors of the economy — hospitality, fast food, retail and agriculture — the increase is certain to have a positive impact on the people who work in these areas.
“The additional income subsidizes rent payments, food, clothing and other tangible needs for families,” said Hancock College business instructor Earl Murray.
It will not, however, lift these workers out of poverty. To rise above the poverty level here requires a minimum hourly wage of $11.82.
So, the minimum wage is not a living wage, and the difference is crucial. A living wage provides someone who works full-time the means to afford the basic necessities of life — food, shelter, health care, clothing, etc. The current minimum wage does not meet those standards, not here or anywhere else in the U.S.
But the minimum wage did not always automatically equate to a life of poverty. Originally set at 25 cents an hour in 1938, it peaked in terms of buying power in 1968, when it was set at $1.60. To place this in perspective, in 1968 a gallon of gasoline cost 33 cents, a new home cost $26,600, and a dozen eggs cost 53 cents. The unemployment rate was 3.8 percent.
From the 1960s until the early 1980s, one full-time job at minimum wage was enough to keep a family of two above the poverty line. It was the equivalent of a living wage, and the economy was healthier for it.
Today, any job that pays less than $10 an hour, even full-time, places a person below the poverty level, and this accounts for 25 percent of the private-sector jobs in the U.S. Most of these jobs pay no benefits, and many who work in them turn to public assistance, such as food stamps, simply to make ends meet. Most of the jobs added since the Great Recession ended are low-wage jobs.
An estimated 4.8 million people work at minimum wage. Contrary to popular belief, most are not teenagers or students. The average age is 35, and 64 percent are female. More than 250,000 are college graduates, and another 200,000 have at least two years of college.
Increasing the minimum wage gives the lowest-paid workers more purchasing power, and consumer spending accounts for 70 percent of the economy. Giving them a living wage would help them get off public assistance, thus saving the taxpayers money.
The minimum wage has been controversial since it was first enacted into law. House Speaker John Boehner is so opposed to increasing it, he once threatened to commit suicide if a bill raising it was passed. Oklahoma enacted a law in April making it illegal to raise the minimum wage in that state. But all empirical evidence indicates that increasing the minimum wage to a living wage will only benefit the economy overall.
In 1933, President Franklin D. Roosevelt said, “No business which depends for its existence on paying less than living wages to its workers has any right to continue in this country.” Those words are as relevant today as they were then. If everyone, especially employers, would heed them, we will all benefit.
Mark James Miller, President, Part-Time Faculty Association of Allan Hancock College, CFT Local 6185, Santa Maria, CA