SALT LAKE CITY — The House of Representatives voted Thursday to increase minimum wage nationwide from $7.25 to $15 by 2025.
The bill passed with a 231-199 vote, The New York Times reported. Only three Republicans voted for it, while six Democrats opposed it. The bill is unlikely, however, to pass the Republican-controlled Senate.
The last increase in the minimum wage occurred in July 2009, making this the longest period in history without a wage increase since the minimum wage was established in 1938. Today’s minimum wage has 17% less buying power than 10 years ago, and 31% less than in 1968, according to the Economic Policy Institute.
As the U.S. continues to face the repercussions of financial disparity, such as rising health care costs and poverty levels, minimum wage has become a hot topic for the 2020 presidential candidates. Why has Congress been so slow to act on raising the minimum wage? And who and what would be affected by the increase?
Why so long?
In the current political climate, there’s not much on which the two major parties agree, making an already belabored political process even slower. But there are elements to the minimum wage conversation that make it even more difficult than usual.
“Few economic policy issues provoke more public debate than the minimum wage,” writes Michael Cassidy, a fellow at The Century Foundation.
“(I)n a country that prides itself on individual self-determination,” Cassidy continues, “what is the least we deserve to work for? Because the minimum wage is not indexed for inflation — so that its real value is always eroding — this is a question we’re constantly forced to reassess.”
And this constant reassessment takes time because the issue quickly splits into complicated fragments.
Addressing some of these fragments, economist Paul Krugman writes: “(Economists) will admit to their colleagues that (wage) increases are not the best way to help the poor, but argue that it is the only politically feasible option.”
“But I suspect there is another, deeper issue here,” Krugman continues, “namely, that even without political constraints, advocates of a living wage … don’t want people to ‘have’ a decent income, they want them to ‘earn’ it.”
Meanwhile, members of both political parties disagree about how to handle the minimum wage. Some legislators think this current bill is too aggressive for rural communities and small business, according to Bloomberg Law. In other words, the diverse economies of America make minimum wage legislation tough.
“I represent an area that cannot absorb a $15 minimum wage as fast as other areas of the country that are perhaps a little more economically robust,” Rep. Anthony Brindisi (D-N.Y.) told Bloomberg Law, saying that “leadership has had a lack of openness on any changes.”
Is Congress maintaining income discrepancy?
Despite a typically lengthy political process, many are wondering why legislation affecting income inequality has been so slow. Could it be intentional?
Economic inequality and political inequality reinforce each other, according to a study by policy researchers at Demos:
“Campaign contributions from the top 0.01 percent of income have risen dramatically and, increasingly, a handful of super wealthy individuals are dominating political spending.”
As a result, wealthy interests are prioritized and advanced while lower income and working family interests are often ignored.
The study also finds that 53 percent of African Americans and 45 percent of Latino Americans are in the bottom third of income distribution, a group whose preferences Vanderbilt political scientist Larry Bartels says “(has) no apparent impact on the behavior of their elected officials.”
Issues such as blocked campaign finance reform and new voter ID laws also disproportionately affect low-income voters and people of color. This increases the number of disenfranchised voters, thereby decreasing representation for the issues they face and pushing those issues even lower on the agenda.
Who would gain — and who would lose?
A minimum wage increase would benefit roughly 1 in 6 Americans, according to the Bureau of Labor Statistics, with worker wages increasing by $44 billion.
The greatest impact would be on those living below the poverty line, with 1.3 million Americans able to emerge from poverty because of the wage increase, reports David Dayen, executive editor of The American Prospect.
There are initial costs, Dayen says. Projections suggest 1.3 million Americans would lose their jobs — half of this number are teenagers and many of the 700,000 adults are part-time workers. There would be a 0.3 percent increase in consumer goods and services, and businesses overall would lose $14 billion.
Additionally, conservative economists argue that a minimum wage increase hurts the middle class by offering no assurance that employers will raise wages for workers in careers.
But the Economic Policy Institute says that these costs get mitigated by an improved low-wage job market that will turn over as the wage increase happens.
“As a wealthy American and an investor, I’m all in on raising the minimum wage,” writes Morris Pearl, former managing director of investment firm BlackRock, in a piece for CNBC.
Pearl says the U.S. economy suffers when people working minimum wage jobs don’t have spending power.
“There’s a reason Henry Ford paid his workers enough to be able to afford the Model Ts they were making — a business is only as strong as its customer base. By expanding that base, businesses across the country stand to benefit.”