Home Career Why experts say a higher federal minimum wage rate is long overdue

Why experts say a higher federal minimum wage rate is long overdue

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A restaurant worker at a “Wage Strike” demonstration on May 26, 2021, organized by One Fair Wage in Washington, DC

Anna Moneymaker | Getty Images News | Getty Images

Minimum wage workers in some parts of the US are getting a boost thanks to higher pay rates that took effect this month.

Connecticut, Nevada, Oregon and Washington, D.C. all set new, higher minimum wages as of July 1. These increases come as the federal minimum wage is $7.25 an hour and has not changed since 2009.

President Joe Biden has advocated raising the federal minimum wage to $15 an hour for all workers. In January, an executive order he signed went into effect raising the minimum wage to $15 an hour for federal workers and contractors.

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But efforts to raise the federal wage rate more broadly have been recognized is not subject to inclusion in budget reconciliation legislation last year.

“It seems to have stopped a little bit now,” Pamela Loprest, a senior fellow at the Urban Institute’s Center for Income and Income Policy, said of the push to raise the federal minimum wage.

Meanwhile, some states and localities have taken up the issue, p Florida and Delaware moving to a minimum wage of $15 an hour. Companies like Amazon, Target and Walmart have also stepped up and set higher minimum rates for employees.

THIS IS WHERE THE MINIMUM WAGE GROWS

Connecticut:

  • The minimum wage rose from $13 to $14 an hour. It is scheduled to rise again to $15 an hour starting next June.

Nevada:

  • Employees without health benefits: The minimum wage is now $10.50 an hour, up from $9.75, and will gradually increase to $12 an hour in 2024.
  • Employees with health benefits: The minimum wage is $9.50, up from $8.75, and will gradually increase to $11 in 2024.

Oregon:

  • The standard minimum wage is $13.50 an hour, up from $12.75.
  • Portland’s metropolitan rate is $14.75 an hour, up from $14.
  • The minimum wage in non-metropolitan counties is now $12.50 an hour, up from $12.

Washington, DC:

  • The minimum wage is now $16.10 an hour, up from $15.20.

The steps by the states and an increase in the private sector appear “as an alternative to the impasse of federal change,” Loprest said. “It’s definitely the next best way to make a difference.”

How raising wages can help business

While some argue that raising the minimum wage could be a burden on small businesses, the opposite is true, says Holly Sklar, CEO of Business for a Fair Minimum Wage.

“If you have an employee at one business, they are customers at many other businesses,” Sklar said.

“It’s a really, really great way to stimulate consumer demand, put money in the pockets of local customers for local businesses,” she said.

Persistent inflation can make it difficult to raise wages

Prices at Chipotle Mexican Grill rose about 4% to cover the cost of raising the chain’s minimum wage to $15 an hour. Pictured are Chipotle employees in Houston.

Brandon Bell | Getty Images News | Getty Images

Admittedly, high inflation has made it difficult to raise wages, Saginaw said, and has also challenged his business to find ways to cut additional costs to avoid price increases.

Some economists worry that a higher federal minimum wage could spur inflation, the idea Biden refused amid calls for $15 an hour.

That argument makes sense to David Cooper, director of the Economic Analysis and Research Network at the Economic Policy Institute, because low-wage jobs aren’t concentrated in industries behind rising prices.

The federal minimum wage has lost about 26% of its value since the last change in 2009 and about 40% since 1968, Cooper said.

While efforts by states and cities to raise minimum wage rates are helping, about 20 states still have minimum wages set at federal rates.

“It would be a lot better if we just raised the federal minimum wage” and did what many of these states and cities already do, which is to build in an automatic adjustment for inflation or changes in wages, Cooper said.

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