Minimum Wage Increase Long Overdue

The federal minimum wage protects low-wage workers by establishing an hourly wage floor and strengthens the economy by increasing consumers' purchasing power. Because the minimum wage is not indexed with inflation, its value erodes each year that the government fails to act, making it more difficult for low-wage workers to make ends meet.

Today, a minimum wage employee who works 40 hours a week, 52 weeks a year, earns only $10,712 a year—$5,000 below the 2004 poverty line for a family of three. The current minimum wage is insufficient for low-wage families to meet their most basic needs.      

Congress has not increased the minimum wage in more than six years.The last increase raised the minimum wage from $4.25 to $4.75 on October 1, 1996 and to $5.15 on September 1, 1997.  Since 1997, inflation and government inaction have eaten away 90% of the value of that increase, returning the minimum wage to a historically low level in terms of purchasing power. The minimum wage has also lost significant ground compared to average hourly earnings in private employment. In the first quarter of 2004, the $5.15 minimum wage was only 33.2% of average hourly earnings ($15.52)—the lowest it has been in more than 50 years.

Recognizing the plight facing low-wage workers, two Senate proposals raising the minimum wage are expected. The first is likely to propose an increase to $7.00 in three stages. An alternate proposal is expected to propose a smaller increase to $6.25 an hour. Unfortunately, neither proposal suggests indexing the minimum wage to increases in the cost of living.