The real, inflation-adjusted, value of the federal
minimum wage has fallen dramatically over time. The real value of the
federal minimum wage peaked in 1968 at 10.85 an hour, 50 percent above
the current level. Moreover, since 1968, average U.S. labor productivity
has risen by roughly 140 percent. This means that, if the federal
minimum wage had risen in step with both inflation and average labor
productivity since 1968, the federal minimum wage today would be $26.00
an hour. (References for all data cited in this petition can be found
here: https://www.peri.umass.edu/publication/item/722-technical-appendix-and-references-for-15-00-minimum-wage-petition)
If a worker today is employed full time for a full
52-week year at a minimum wage job today, she or he is making $15,080.
This is 21 percent below the official poverty line for a family of
three. Raising the minimum wage to $15 an hour would deliver much needed
living standard improvements to 76 million U.S. workers and their
families. The average age for these workers is 36 years old and they
have been in the labor force for an average of 17 years. Only 6 percent
of the workers who would benefit from this minimum wage increase are
teenagers; i.e., 94 percent are adults.
Numerous states and municipalities throughout the
United States are already operating with minimum wage standards above
the $7.25 federal minimum. Thus, 29 states plus Washington, DC maintain
minimum wages between $7.50 and $9.50. These measures cover 61 percent
of the U.S. population. The cities of Los Angeles, Seattle, and San
Francisco have all established $15 minimum wage standards that, for all
three cases, will be fully phased in as of 2021. A $13 minimum wage will
be operating in Chicago as of 2019. Other cities, including New York
and Washington, DC, are presently considering similar measures. The
State of New York is also examining a $15 minimum wage proposal for the
fast-food industry.
Opponents of minimum wage increases frequently argue
that such measures will mean fewer employment opportunities for low-wage
workers because businesses will be less willing to hire workers at the
increased wage level. But the weight of evidence from the extensive
professional literature has, for decades, consistently found that no
significant effects on employment opportunities result when the minimum
wage rises in reasonable increments. This is because the increases in
overall business costs resulting from a minimum wage increase are, for
the most part, modest.
We recognize that raising the federal minimum wage to
$15 an hour as of 2020 would entail an increase that is significantly
above the typical pattern with federal minimum wage increases.
Nevertheless, through a well-designed four-year phase-in process,
businesses will be able to absorb the cost increases through modest
increases in prices and productivity as well as enabling low-wage
workers to receive a slightly larger share of businesses’ total
revenues. On average, even fast-food restaurants, which employ a
disproportionate share of minimum wage workers, are likely to see their
overall business costs increase by only about 2.8 percent per year
through a four-year phase in to a $15 federal minimum wage by 2020. That
means, for example, that McDonalds could cover fully half of the cost
increase by raising the price of a Big Mac, on average, by 7 cents per
year for four years—i.e. from $4.80 to $5.08. The remaining half of the
adjustment could come through small productivity gains or a modestly
more equal distribution of the increase in revenues generated by the
U.S. economy’s overall rate of economic growth.
The economy overall will benefit from the gains in
equality tied to the minimum wage increase and related policy
initiatives. Greater equality means working people have more spending
power, which in turn supports greater overall demand in the economy.
Greater equality also means less money is available to flow into the
types of hyper-speculative financial practices that led to the 2008-09
Wall Street crash and subsequent Great Recession.
Moreover, the overwhelming factor determining
employment opportunities for low-wage workers is macroeconomic
conditions—whether the economy is growing or in a recession. Thus, in
1968, when the U.S. minimum wage reached $10.85 in real dollars, the
overall unemployment rate was 3.6 percent. By contrast, during the
depths of the 1982 recession, the real value of the minimum wage had
fallen to $8.22 while unemployment peaked at 10.8 percent.
In short, raising the federal minimum to $15 an hour
by 2020 will be an effective means of improving living standards for
low-wage workers and their families and will help stabilize the economy.
The costs to other groups in society will be modest and readily
absorbed.
Signers (Institutional listing for identification purposes only):
