Wednesday, March 9, 2016
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By Mike Poletika
In Indiana, minimum wage workers are
expected to live on $7.25 an hour. How can they do this? Well, the simple
answer is they can’t. Research
shows that the current federal minimum wage, which Indiana uses, cannot sustain
a family living on a basic needs budget, one that allows individuals and families
to be self-sufficient without allowances for things like dining out or sending
kids to after-school activities. To make up for their budget shortfalls,
minimum wage workers must either work a ludicrous number of hours, as described
in Reason 6, or rely on public, charitable, or family assistance. Minimum wage
workers putting in time on the job should be compensated for their hard work at
a rate that enables them to be self-sufficient and have sufficient time to care
for and spend with family. As productivity
increased by 72.2% from 1973 to
2014, the typical worker’s hourly wage increased by only 9.2% during the
intervening 41 years. Simply from a worker productivity perspective, it’s time
for workers to get the raise they have earned! As session draws to a close tomorrow, another year has passed in which legislation aimed at raising the minimum wage was not even given a public hearing (SB 211 and SB 369). Below is a list 16 reasons why
Indiana should have raised the minimum wage in 2016.
1. Outdated: There is not one county in Indiana
where where working full time at the minimum wage of $7.25 per hour is sufficient to support even a single
adult, as shown in our new Indiana Self-Sufficiency Standard 2016 report. When looking at self-sufficient hourly
wages across the state, the low is Vermillion County at $7.96, the high is $11.39
in Hamilton County, with the median self-sufficiency wage across all Indiana
counties at $8.78.
2. 25 Years Without a Raise: Waiters
and waitresses in Indiana are paid $2.13 per hour by their employers (29% of the minimum wage). The last
time they saw a raise was a quarter-century ago (1991), even as the industry
has seen strong growth and profitability. According the National Women's Law
Center, gender gaps and
poverty rates for tipped workers are smaller in states where the tipped
minimum wage is equal to the minimum wage.
3. Wage Erosion: Because the value of the minimum wage has been left to erode due to inflation, more workers are earning poverty wages. Reducing the erosion of wages would be a
good step towards reducing income inequality. The U.S. Conference of Mayors cited the
"dramatic decline" in the value of the minimum wage in their
recent 'Income and Wage Gaps Across the US' report. The inflation-adjusted minimum wage in 1968, when it was at
its peak, has the same buying power as $10.90 in 2015 dollars.
4. It's Not Just for Teens Anymore: Contrary to common perception, less than a
quarter of workers earning the minimum wage (or close to it) are teens; 56% are women, 28% are raising families and 44% have at least
some college education. According to the Brookings
Institution,
“the worker likely
to be affected by a raise in the minimum wage today is a woman
in her 30's working full-time, with a family to support."
5. Gender Gap: In 2014, Hoosier women
earn just $0.75 cents to each dollar their male
counterpart earns (the 9h largest gender gap in the U.S.). Because 2/3rds of minimum wage
workers are women, raising the wage (and
the tipped wage) is a good step towards
equalizing pay. According to a GovBeat analysis of EPI's
report, 20% of female workers in Indiana would be directly affected.
6. Working Towards Self-Sufficiency: In Indiana, the
median number of work hours at the minimum wage for a single adult to become
self-sufficient is 48 hours per week. The number of hours increases
significantly to 108 hours for a single adult with one preschooler and one
school-age child. For a family with two adults, a preschooler, and a school-age
child, each adult would need to work 64 hours for the family to be
self-sufficient.
7. Housing: A full-time minimum wage worker in
Indiana, who works 40 hours per week for four weeks, earns $1,160 per month. The
median Fair Market Rent for a single adult across Indiana’s counties is $526,
equaling 45% of a minimum wage worker’s monthly wages. This is 15% more than
the rule of thumb that housing costs
should be about 30% of a worker’s monthly income.
8. Childcare:
The cost of childcare
almost exceeds monthly earnings for minimum wage workers. For families with one
preschooler and one school-age child, the median cost of childcare across
Indiana’s 92 counties is $942. Comparing that expense to the monthly minimum
wage for a full-time worker, there is little incentive for parents to work at
the minimum wage.
9. 637,000: That's how many Hoosiers (23.4% of the workforce) would
get a raise in 2016 if Congress raised the wage to $10.10 per hour, according
to a report from the Economic
Policy Institute.
This includes those affected directly (436,000 making less than $10.10) and
indirectly (201,000 making just above the minimum wage whose wages would be
pushed up due to pay scale adjustments). Fortunately, Indiana lawmakers can
give a raise to Hoosier workers, instead of waiting for Congress to act.
10. $1,000,000,000: According to the same EPI analysis,
this large scale policy tool for working families would equal
a cumulative raise of nearly one-billion dollars for Hoosiers. Like tax breaks for low-
and middle-income workers, raising the minimum wage puts more money in the
pockets of working families.
11. Growing the Tax Base: Standard and Poor's cites rising income inequality
as "contributing to weaker tax
revenue growth", making it more difficult for state and
local governments to invest in education and infrastructure.
12. Myth
of a Spike in Unemployment:
Critics of raising the minimum wage often argue that an increase will cause a
spike in unemployment. However, decades of
research has shown this argument is unfounded. Two
recent meta-analyses
of research on minimum wage increases during the 1990s found that “the minimum
wage has little or no discernable effect on the employment prospects of
low-wage workers.”
13. Economic
Growth: In a stagnant economy,
increasing wages can lead to economic growth.
Low-wage workers tend to spend any additional income they receive on their
basic needs. If the minimum wage increases, these workers would pump money into
the economy, boosting GDP which would produce job growth in the broader
economy.
14. Future
Generations: Low
wages not only affect adults, but children as well. Children whose parents work
for the minimum wage live below the federal poverty line. Research
has found that children being raised in poverty have lower academic
achievement, poorer nutrition, fewer job prospects as adults, and worse
physical health than their more affluent peers. Raising the wage will help
ameliorate the deleterious effects of poverty on children.
15. A
Moral Imperative:
Not only is raising the minimum wage an economic imperative, it is also a moral
one. In an open letter
to Congress, over 350 faith leaders urged legislators to raise the minimum
wage, writing “legislation requiring employers to pay a living wage is
indispensable to ensuring that no worker will suffer the indignity of poverty.”
16. Public
Opinion: A strong majority of Americans support raising the minimum wage.
According to a 2015 New York Times poll,
71% of respondents favored raising the minimum wage to $10.10. It’s time for
legislators to listen to their constituents.
