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Minimum Wage

In 1938, the Fair Labor Standards Act established a federal minimum wage to serve as “a floor below wages,” to reduce poverty and to ensure that economic growth is shared across the workforce. While the minimum wage still serves as protection for the country’s lowest-paid workers, today it is far below its historical level and loses value every year due to inflation. In fact, if the federal minimum wage kept up with inflation it would be $10.75 an hour, not the $7.25 it is today. 

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Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) introduced a bill in 2013 to raise the federal minimum wage to $10.10 an hour by 2015 and would index it to inflation—a modest proposal. If the federal minimum wage had kept pace with workers’ productivity since 1968, the inflation-adjusted minimum wage would be $18.67.

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Raising the federal minimum wage has broad support. Not only do four out of five Americans support raising it to $10.10, but four out of five economists agree that the benefits of raising and indexing the minimum wage outweigh any costs.

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Even in a struggling economy, studies have shown that increasing the minimum wages doesn’t damage job growth—in fact, a landmark study found the opposite; employment increased as did consumer spending in the years following the increase.

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Some states, however, are taking legislative measures to undermine U.S. wages and labor standards. In recent years, states have passed laws that restricted the minimum wage and have stripped workers’ rights to overtime pay and sick leave. The corporate lobbies behind these initiatives have been fiercely opposed to raising the minimum wage and indexing it to inflation. This means that the country’s lowest-wage workers are collectively earning tens of billions of dollars less per year than their counterparts were in 1968. And the profits are being funneled to the top 1%.

While the wages of the country’s top earners have kept pace with productivity, workers earning at or below minimum wage are having trouble making ends meet, and they’re disproportionately women. Nearly two out of three minimum wage earners are women and of those, more than half are older than 24.

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In every state, a full-time, minimum wage worker with two children lives at or below the poverty level. And in every state, that same worker couldn’t afford a two-bedroom apartment working 40 hours a week.

Hours at Minimum Wage Needed to Afford Rent. Source: National Low Income Housing Coalition

Raising the minimum wage is a critical and simple way to help repair the underlying weakness in our economy. It would boost consumer spending and increase the purchasing power of millions of low-wage workers, especially in states with the highest percentages of low-wage workers—many of which also have the highest rates of poverty.

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