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17 Reasons to Raise Indiana's Minimum Wage in 2017
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17 Reasons to Raise Indiana's Minimum Wage in 2017
May 2017 | Amy Carter & Maria Laster
The past three years, the Indiana Institute for Working Families has given more and more reasons to increase the
minimum wage. This year, we updated the list and added two new items with one
theme: public health. As minimum wage debates continue, the positive public
health outcomes cannot be overlooked or denied. Read on to see a compelling,
though not exhaustive, list of seventeen reasons to raise the minimum wage in
2017.
1. Working Towards Self-Sufficiency - 40 Hour Work Week: There is not one
county in Indiana where working full time (40 hours/week) at the minimum wage
of $7.25 per hour is sufficient to support even a single adult, as shown in our Indiana
Self-Sufficiency Standard 2016 report. A single adult has to work a
median 48 hours per week at the minimum wage in order to be self-sufficient.
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. Let’s raise
the minimum wage to a level that allows Hoosiers to spend time with the
families for which they are working so hard to provide.
2. Working Towards
Self-Sufficiency – Housing: A full-time (40 hours), minimum
wage ($7.25) worker in Indiana earns about $1,160 per month. The median
Fair Market Rent for a single adult in a one-bedroom home across Indiana’s
counties is $486, equaling 42% of a minimum wage worker’s monthly wages. The rule
of thumb for housing says that no more than 30% of a worker’s monthly
income should be spent on rent. However, national
data shows over a third of US households faced housing cost burdens
(meaning spending more than the rule of thumb) including 17% that are severely
burdened (spending 50% or more of income). In order to afford the Fair Market Rent for a
two-bedroom apartment, which is what a family with children needs, a
minimum wage earner must work 77 hours per
week, 52 weeks per year!
The minimum wage needs to be closer to $14 in order for a minimum wage worker
to afford housing at less than 30% of their income.
3. Working Towards Self-Sufficiency – Childcare: In Indiana, the
cost of childcare almost exceeds monthly earnings for minimum wage workers. In
2015, the average cost of childcare for families with one infant and one four
year old was over
$1,300/month! Comparing that expense to the monthly minimum wage for a
full-time worker, $1,160, it is not difficult to see why families are not
self-sufficient. Childcare
tax credits and state childcare vouchers can help, but not all children
receive vouchers. In January 2017, Indiana had
4,385 children on Child Care Development Fund (CCDF) waitlists. National
data from 2015, the most recent year for which we have data, suggests
that with the current investment in Child Care and Development Block Grant
(CCDBG), only 15% of children eligible for child care assistance are getting
support. A raise in the minimum wage could help make childcare more affordable for
those at two and three times the federal poverty level, thus leaving spots open to increase
access for low-income families who want this aid.
4. 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. The Bowen Center for
Public Affairs at Ball State University found in their 2015 Hoosier Survey that 64% of respondents were supportive of a minimum wage
raise to $10.10. While Democrats and Independents were more favorable, almost
46% of Republicans were in favor. It’s time for legislators to listen to their
constituents.
5. Tipped Workers – 26 Years
Without a Raise: Waitstaff in Indiana are paid $2.13 per hour by
their employers (29% of the minimum wage) according to the Department of Labor. Tips are
expected to cover the difference between that wage and minimum wage; if they
don’t, employers are to cover the difference. The last time tipped
workers saw a raise was a quarter-century ago (1991), even as the industry has
seen strong growth and profitability. Women make up the majority in tipped
occupations. 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. See a simplified table of minimum wage, tipped wage,
and poverty rate of women in tipped occupations here. As
the fight for an increased minimum wage continues, tipped workers cannot be forgotten.
6. It's Not Just for Teens Anymore: Contrary to common perception, fewer than 20% of
workers earning the minimum wage or below are teens. Minimum wage workers
are not just high-schoolers earning spending money; they are at
least 20 years old and have greater family responsibilities. (Check out Table
1 here for a breakdown by age, gender, and race.) In Indiana
specifically, 88% of those who would be affected by an increase in the
minimum wage to $15 are age 20 and older.
According to a recent Economic
Policy Institute fact sheet, “the typical worker who would benefit
from a $15 minimum wage is a 36-year-old woman with some college-level
coursework who works full time.” The minimum wage conversation cannot be pushed
aside based on the perceived age of minimum wage workers. (Though there is no
justification for paying teenagers poverty level wages either. Perhaps a
conversation for another day…)
7. Gender Gap: Based on 2011-2015 data,
white and Asian Hoosier women holding full-time, year-round jobs earn $0.76 for
every dollar paid to white, non-Hispanic men. Black and Latina Hoosier women
earn even less, $0.66 and $0.54 respectively. This is unacceptable and raising
the minimum wage can help. More than 301,000
households in Indiana are female-led. Thirty-two percent of those households –
more than 97,000 – have incomes that fall below the poverty level. Increasing
the minimum wage, especially in these female-dominated professions, could give
these families more money for savings, child care, education, and housing. Because 3/5th of minimum wage workers
in Indiana are women, raising the wage is a good step toward equalizing pay.
8. Wage Erosion: Adjusted
for inflation, the minimum
wage peaked in 1968! (That's 49 years ago. 49 years!) The last federal raise was in 2009 and since then minimum
wage has lost 9.6% of its purchasing power. If the minimum wage had grown with
productivity, it would have been $18.85
in 2016. If it had only grown with average wages, it would still have been $11.35
in 2016. 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.
9. Low-
to Mid-Wage Workers Earning Less: Real
(inflation-adjusted) median hourly wages are down $0.84 since 2007, and 20th
percentile wages are down $0.73. See interactive data here. Raising the minimum wage would likely increase
these mid-range wages as well.
10. Race to the Bottom:
According to a 2016 report from the Bureau of Labor Statistics, 3.9% of hourly workers in Indiana
make at or below minimum wage. 3.9% represents 32,000
workers at minimum wage and 37,000 workers below minimum wage. That's more
than all neighbor states (Illinois 3.2%, Kentucky 3.5%, Michigan 3.7%, and Ohio
2.9%) and the U.S. average of 3.3%.
11. Myth of a Spike in Unemployment: Critics of raising the minimum wage often argue that an
increase will cause a spike in unemployment. However, seven decades of historical data
find no correlation between minimum wage increases and employment levels. On the contrary, in the considerable majority of instances
(68%), overall employment increased after a federal minimum wage
increase. In the most substantially affected industries, the rates were even
higher: in the leisure and hospitality sector, employment rose 82% of
the time following a federal wage increase, and in the retail sector it rose 73% of the time. Moreover, the small minority of instances in which
employment declined —either overall or in the indicator sectors—following a
federal minimum wage increase occurred during periods of recession or near
recession.
12. 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. Economic Policy Institute supports this idea, saying that a “high pressure economy that
eliminates the remaining demand shortfall in the U.S. economy and leads to low
rates of unemployment and rapid wage growth would likely induce faster productivity
growth.”
13. 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. This year,
the Indiana General Assembly (IGA) discussed the expansion
of Pre-K education, which not only prepares students for academic and social
success, but allows
parents to work or go back to school. However, funding was not increased
as much as advocates suggested. Increasing the minimum wage could give the IGA
more money to provide supports for low-income Hoosiers (which helps them reach
self-sufficiency, which means more income for taxes, which can increase funding
for education, which helps people reach self-sufficiency, and so on and so
forth.)
14. Reduce Need of and Spending on
Public Assistance: According to a 2016
Economic Policy Institute report using Census data from 2012-2014, for
those in the lowest wage category (those earning up to $9.91/hour), a $1
increase in hourly wages reduces the likelihood of needing public assistance by
3.8%. So if this entire group consisting of 15.5 million workers had an average
$1 increase in hourly wages, there would be an approximate 3.8% decline in
dependence on public aid, or 600,000 fewer workers receiving benefits. The
study also found that for each $1 increase in minimum wage, benefit dollars for
all public assistance programs decreased by $199. If those making $9.91/hour or
less each had an average $1/hour raise, the expenditures on means-tested government benefit would go
down $3.1 billion annually.
15. Future Generations: Low wages not
only affect adults, but children as well. Research has found that
children being raised in poverty have worse physical, psychosocial, and
academic outcomes than more affluent peers. A recent
study of minimum wage increases showed that a $1 increase in minimum wage
implies a 9.6% decrease in neglect reports.
Raising the wage will help ameliorate the deleterious effects of poverty
on children, specifically reducing the risk of child welfare involvement for
children 0-12 years old.
16. Decreasing
Teen Birth Rate:
Teen parenthood costs the public more than $9 billion per year
and can decrease the
educational and employment outcomes
of both the teen and the child. A recent study done by an Indiana University
researcher found that a minimum wage increase of $1 would reduce the adolescent
birth rate by 2%, leading to about 5000 fewer adolescent births per year. As the
discussion on minimum wage continues, positive unintended consequences, like
the effects on public health, can be strong debate points and influences in
creating minimum wage policy.
17. Decreasing
Infant Mortality Factors:
A 2016 study looked at minimum wage, birth weight,
and post-neonatal mortality by state from 1980-2011 to see what effect minimum
wage had on infant mortality and birth weight. They found that a $1 increase
above the federal minimum wage decreased low birth weight births by 1-2% and
decreased post-neonatal mortality by 4%. In 2005, the social and health cost
for low weight births was over $26 billion! Imagine how great the impact is a
decade later. According to KIDS COUNT data from
the Annie E. Casey foundation,
Indiana does not compare well to neighboring states – 7.3 infant deaths per
1000 live births compared to 6.0 in Illinois, 6.7 in Kentucky, 6.6 in Michigan,
and 7.2 in Ohio. (You can see interactive data on infant mortality here.) Raising the minimum wage can not
only save money on public health outcomes, it can literally save lives.
Tag :
Minimum wage
16 Reasons to Raise Indiana’s Minimum Wage in 2016
(Click on bottom of image to enlarge)
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.
Tag :
Minimum wage
15 Reasons to Raise Indiana's Minimum Wage in 2015
By Derek Thomas:
On New Years Day, workers in Indiana joined a shrinking minority whose states' minimum wage is still equal to the federal (bare) minimum wage of $7.25. On January 1st, 2015, 3.1 million workers in 20 states received raises. For 2015, we've updated our blog with new data and added a 15th reason why the Indiana General Assembly should resolve to be the 30th state in the nation to reward hard working families by providing them with the long-overdue raise they deserve.
- Outdated: In no county in Indiana does the federal minimum wage of $7.25 support a single adult according to inflation adjusted data from our Self-Sufficiency Standard. The low is Vermilion County at $7.97, the high is $11.21 in Hamilton County and the statewide weighted (for population) median is $9.26.
- Wage Erosion: When comparing the value of the minimum wage today with the minimum wage in 1968 and inflating it to 2012 dollars, the 1968 minimum wage would equate to $10.96 in 2014 dollars. Because the value of the minimum wage has been left to erode due to inflation, more workers are earning poverty wages.
- Low- to Mid-Wage Workers Earning Less: Real (inflation-adjusted) median hourly wages are down $0.84 since 2007, and 20th percentile wages are down $0.73. See interactive data here.
- 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.
- $1,000,000,000: According to the same 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 when they need it most.
- Quality of Life: Local economies win when families with the highest propensity to spend are able to spend money to meet their basic needs. Standard and Poor's cites rising income disparity as "contributing to weaker tax revenue growth", making it more difficult for state and local governments to invest in education and infrastructure.
- Inequality: Reducing the erosion of wages would be a good step towards reducing 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.
- 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 percent are women, 28 percent are raising families and 44 percent 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."
- Gender Gap: Women earn just $0.73 cents to their male counterpart (the 6th 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 equal pay. According to a GovBeat analysis of EPI's report, 20% of female workers in Indiana would be directly affected.
- Falling Behind: Measuring the ratio of the minimum wage to median wage is useful in determining the strength of the minimum wage. The average minimum-to-median wage ratio was 39 percent in Indiana in 2013 compared to 52 percent in 1979. According to the OECD, among advanced nations, U.S. is near bottom for minimum-relative-to-average wages of full-time workers - just better than Czech Republic and Estonia.
- Working Harder For Less: Working families have not shared in the gains of productivity. If the wage floor in Indiana were indexed to Hoosier productivity, it would be more than $19 per hour. From 2009 - 2012 alone, productivity increased by 4.5% for all occupations, while real median wages declined by 2.8%, according to the National Employment Law Project.
- 24 Years Without a Raise: Waiters and Waitresses in Indiana make $2.13 per hour (29% of the minimum wage). The last time they saw a raise was almost a quarter-century ago (1991), even as the industry has seen strong growth. According the National Women's Law Center, gender gaps and poverty rates for tipped workers are smaller in states whose tipped minimum wage are equal to the minimum wage.
- Race to the Bottom: 6.2 percent of Indiana's 1,731,000 hourly workers make at or below minimum wage. That's an increase from 5.2% and a larger share than all neighbor states and the U.S. average of 4.3% (6.2% represents 61,000 at minimum wage and 47,000 below minimum wage).
- Working Full-Time in Poverty: At $7.25 per hour, one person working full‐time (40 hours per week, 52 weeks per year) would earn just over $15,000 per year – so little that with one child they would be below the federal poverty line.
- Self-Sufficiency: In order to afford the Fair Market Rent for a two-bedroom apartment, a minimum wage earner must work 77 hours per week, 52 weeks per year. Increasing the minimum wage would help a family move closer to economic self-sufficiency.
A minimum wage that reflects the increased cost of living is fundamental to economic self-sufficiency. Recognizing this, more than half of all U.S. states now have minimum wages higher than the federal minimum for the first time ever. This year, several other states will be considering increases as well. Hard working Hoosiers don't deserve to be in that shrinking minority.
Tag :
Minimum wage
