Policy Summary
Last month, Democrats in the House passed a bill that would raise the minimum wage to $15 an hour by 2025. The so-called ‘Raise the Wage Act faces opposition in the GOP-controlled Senate floor, where as of yet Majority Leader McConnell has refused to raise the issue. 2009 was the last year that the federal government updated its minimum wage. As of this past June, this decade-long stretch broke the previous record for the longest period without minimum wage increases. Coming off this long wage freeze, the ‘Raise the Wage Act’ would more than double the pay of lowest-earning workers in any states and cities that remain pegged to the federal minimum. While a GOP-controlled Senate continues to render the ‘Raise the Wage Act’ implausible in the short-term, the bill’s passing in the house signals a commitment by national Democrats to pursue the $15/hour target rate as we move into the next decade.
The $15/hour benchmark has its origins in the resurgent grassroots labor campaigns of the last decade. Workers and progressive labor activists in the fast food industry, especially, have done the work to mount political pressure behind this goal. The “Fight for $15” slogan was coined at a one-day strike by fast food workers in New York City in 2012. Energized by that campaign, “Fight for $15” grew into a militant movement with global presence. The organization’s official website claims footholds in over 300 cities, including many outside the U.S. Back in 2014, a local campaign spearheaded by the city’s Socialist Alternative chapter made Seattle the first municipal government in the U.S. to sign the target $15/hour minimum wage into law.
Since then, the $15/hour rate has been adopted by cities across the country. Los Angeles is set to reach its $15/hour benchmark by the end of 2020, and New York City and San Francisco reached that rate at the end of 2018. Seven states have passed measures that will raise their wage floor to $15/hour in the coming years — California, Massachussetts, New York, DC, Illinois, New Jersey, Maryland, and Connecticut, in order of their bill’s passing. As a result, there are several areas in the country where the minimum wage is set to reach $15/hour in cities and surrounding areas before eventually reaching a state-wide $15/hour minimum wage. In New York, for instance, the downstate area, Westchester and other counties surrounding New York City, will reach $15/hour in 2021, whereas upstate workers will receive more gradual inflation-adjusted wage increases up to an eventual $15/hour at an undetermined date. As with healthcare and other major issues that have come up at the Democratic primary debates so far, vast differences in the actual impacts of policies are often disguised by similar rhetoric or messaging. It will be important throughout the coming year to pay attention to the details when candidates for national office mention changes to minimum wage policies.
Analysis
When political work behind the $15/hour target began in 2012, the policy was still seen by many as a fringe proposal. Even for most Democratic politicians, the policy was only conceivable in high-wage urban environments with strong progressive political organizations. As such, the initial victory in Seattle met equal fanfare and skepticism. Progressive activists declared the Seattle bill the first victory in a long-awaited reversal in the balance of power between capital and labor in the U.S. Conservative skeptics expressed the fear that minimum wage laws are untenable without raising unemployment. So far, studies that have looked at the effects of Seattle’s policy have produced mixed results. One notable 2017 study suggested that although most workers benefited from the bill, inexperienced workers newly entering the workforce faced stiffer competition and fewer opportunities. The same authors, however, published a revised study the following year where these losses had largely disappeared, recuperated as the city’s economy adjusted to the wage increase. Even among supporters of wage increases, Seattle seemed like an exceptional case for the policy’s horizon of possibility. Not every city in the United States has a composition of voters and progressive organizations capable of electing committed progressives, let alone socialists, to city council positions.
Yet today, nineteen of the Democratic candidates for President, including centrist frontrunner Joe Biden, have stated support for some version of the $15/hour increase at the federal level. The growing normalcy of the policy proposal is a high-water mark for a Democratic party that has been continuously pushed to the left during the Trump years, at least in rhetoric. Yet, as many analysts have pointed out, “Fight for $15” is not what it once was. In the intervening seven years, the inflation-adjusted value of the slogan has already depreciated significantly. According to Bloomberg, a $15/hour minimum wage in 2025, the year after the date set by the House Democrats’ bill, is comparable to a $12/hour wage in 2012, when the movement began. The current life of the policy, once considered extremely ambitious, is caught between political and economic timelines. As Democratic Party elites become more sympathetic to the $15/hour policy, the actual value it represents depreciates. It is an open question whether the coalitional power necessary to implement the policy at the federal level will keep pace with inflation, passing it before it becomes a watered-down, historically sub-standard increase. The 2020 Senate elections will be a crucial turning point either way, and progressive activists may find it necessary to raise their expectations to maintain adequate pressure on the electoral system.
Across the board, the potential benefits of a minimum wage increase often come down to the details of the laws that have passed. As in the case with New York state, there are exemptions built into their new minimum wage bills, most notably slower rollouts and lower caps for rural areas and smaller companies. Yet, elsewhere, these minimum wage increases have come with wider, structural reforms to the way that wage minimums are regulated. San Francisco’s $15/hour minimum wage law impressively included the very progressive stipulation that the wage be adjusted on a yearly basis to keep pace with increases in inflation, as measured by the Consumer Price Index. The ‘Raise the Wage Act’ also includes such a stipulation, which, if passed by a future Democratic Senate, would be the first federal minimum wage policy in U.S. history to include automated adjustments to wages at pace with inflation. Such a policy would create a permanent safeguard for labor’s share of corporate profits. Optimistically, an inflation-adjusted minimum wage would allow progressive political forces to divert their valuable time and effort away from merely keeping up with increases in the cost of living, and towards more substantial structural and political changes. Pending such an outcome, low wage workers in the U.S. will have to continue year after year with “belt-tightening” adjustments as we march further into the longest stall in the federal minimum wage we have ever seen.
Resistance Resources
- The Economic Policy Institute’s Minimum Wage Hub is a resource on minimum wage policies for the uninitiated and the expert alike. The page offers primers on the basics of minimum wage policy and history, newsletters on the issue, and a searchable database of in-depth research housed at the institute. The Economic Policy Institute is a think tank devoted to, as articulated on its website, “the needs of low- and middle-income workers in policy discussions.” Beyond its credentials as a serious, hard-nosed research institute, the EPI also offers resources to laymen seeking to navigate the complicated debate around problems facing poor and working people in the United States.
- Fight for 15 is a multinational movement of workers and activists demanding a minimum wage of $15/hour. Fast food workers in New York City kicked off the movement in 2012, calling for a $15/hour wage and a union. Today, Fight for 15 is proud to report affiliated actions “in over 300 cities on six continents.” Their website hosts accessible information for workers interested in learning about strikes and unionization, as well as frequent newsletter updates on their movement and labor news around the country.
- MIT’s Living Wage Calculator provides an easy way to estimate the “living wage,” or the wage needed to meet a basic standard of living, in your area. The website breaks down the hourly wage-equivalent in income necessary for a given household to live comfortably in any given county in the U.S. The Calculator breaks the numbers down according to the number of children and number of adults employed full-time in a household. For those interested in the math behind these calculations, the Calculator offers a technical version of its spreadsheet, that cites the data used in any given result.
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