Is 2014 the Year of the Minimum Wage Increase?
Each day, millions of Americans go to work in low wage jobs in order to keep the nation running. The majority of these employees – up to 60 percent – work in the service industry at fast food restaurants, hotels and retail stores to provide the services all of us need to make our own day-to-day lives easier and more efficient.
Yet, even though many employees work more than 40 hours a week, their take-home pay is still not enough to cover their expenses, let alone a safety net to fall back on if the unexpected happens. The Bureau of Labor Statistics reports that in 2012, more than 1.5 million Americans earned just the minimum wage of $7.25. And for many of these dedicated individuals, surviving financially can be a struggle.
As an employment law firm, Barrett & Farahany, LLP has fought for the rights of workers when it comes to fair pay and making sure that companies comply with the Fair Labor Standards Act. We know every dollar helps families who are straining and have represented numerous employees whose pay and security have been compromised. Through our experience and background, we understand paying employees what they’re worth doesn’t mean disaster for a company – in fact, it can make a business – and the economy as a whole – stronger than ever before.
A Promising Beginning
The federal minimum wage has remained stagnant at $7.25 since 2009. However, on January 1, 2014, 13 states, including New York, Washington and Florida, raised their minimum wage levels, giving hope to many that their acceptance could spur legislation in D.C.
Although it’s a start, the states’ increases don’t amount to much for low-wage workers. Only three have minimum wages that are higher than the living wages in their states – Montana, Oregon and Washington. That means workers received a raise, but it’s still not enough to bump them out of financial difficulties. Here in Georgia, we have the largest deficit between the minimum wage and the living wage in the country – 55.8 percent.
As reported by the Huffington Post, the Wider Opportunities for Women advocacy group found it takes $3 more than the federal minimum wage to survive in America’s cheapest county. President Obama’s recommendation of $10.10 comes close, but he and his fellow Democrats have a long fight ahead of them. Thankfully, states are making small steps to get workers the pay they deserve, but it’s not where employees need to be.
The Benefits of a Higher Minimum Wage
Businesses and critics of an increased federal minimum wage state that higher pay would drive up their costs, make them less competitive, and put their companies at risk. On the flip side, workers who can’t survive on minimum wage must often depend on government assistance, increasing demand on taxpayers including those very businesses.
By increasing the minimum wage, the benefits to workers, the companies they work for, and the American economy are substantial:
- Consumers account for 70 percent of the U.S. economic activity. If the wage is increased, the pay would be spent locally on goods and services, driving business across the board.
- Raising the minimum wage could help pull 4.6 million people out of poverty and increase incomes of the lowest paid workers by $1,700 each year.
- Businesses will enhance their productivity and profits. According to Jordan Weissmann of The Atlantic, “Managers find ways to make their employees more productive. Turnover slows down, since people are happier with their paychecks, and the unemployed snap up jobs elsewhere in town.”
- Product prices will adjust accordingly, not skyrocket. Weissmann goes on to say a wage increase to $10.10 would increase food prices 4 percent and overall prices “no more than 0.4 percent.”
- The country won’t fall into a panic. Said The Daily Beast’s Daniel Gross, “In the past few years, the economy has weathered shocks far more significant than a modest increase for several million low-wage employees.”
States understand the impact raising the minimum wage has on the health of their own communities. Over the next 12 months, Congress will need to take the lead from the individual states and make concessions in order to increase the financial security of the workers they represent and the economy they’re voted in to protect. Four years without a wage increase as the cost of living continues to grow is detrimental to those workers who strive to keep our country running strong.