In 2013, SeaTac, Washington voted for a $15 minimum wage, effective January 1st the following year. Since then, the Seattle suburb’s unemployment rate has remained 16% lower and has had a job growth rate 237% higher as compared to the national averages. Campaigns to raise the federal minimum wage from $7.25 (applicable in 21 states) to $10.10 have risen in popularity, though have ultimately failed in legislation. This change would improve the lives of 28 million people, while stimulating the economy with an increase in spending. Many major cities have created long-term rollout plans for significantly higher wages, including Seattle, San Fransisco, Los Angeles, and Chicago.
MIT’s Living Wage calculator determines the minimum someone can realistically spend, adding up housing, transportation, food, health care, and more at local rates. Seattle, with the $11 minimum launched April 1st, is the only major US city that is effectively livable while working at minimum wage. All other cities have negative discrepancies between minimum wage and the cost of living. The majority of the 3.6 million workers at or below federal minimum wage are full-time, yet cannot afford to live comfortably. Boston’s extremely high cost of living and low minimum wage peg it as the least livable city.
This is the data for 22 of the largest US cities:
Through incremental roll out programs, Seattle will reach $16.11, San Fransisco $15.57, LA $15, and Chicago $13.25 by 2020. Assuming the current Urban Consumer Price Index forecast of 2.3% inflation proves itself, and the housing market doesn’t take a significant deviation from it, these wage increases will make up for inflation, and bring greater economic security to workers. Even Boston and Washington DC, while still lowly ranked, are much improved. Cities that don’t regularly increase their minimum wage above inflation will only get worse.
While signing the National Industrial Recovery Act in 1933, Franklin D Roosevelt stated, “It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By “business” I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white-collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level-I mean the wages of decent living.” This is still relevant today. A minimum wage below the cost of living is state-permitted exploitation. Companies able to pay their full-time workers a livable standard that do not are absolutely detrimental to income inequality. If there aren’t enough profits to go around, the company has an unsuccessful business model. Tax payers should not be on the hook to make up for that through welfare.
Despite the claim that COL is not necessary for the high school students who often occupy bottom-earner jobs, 88% of those that would benefit from a federal increase to $10.10 are 20 years or older.
A review of 64 studies on minimum wage increases found no discernible effect on employment. Additionally, more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in support of raising the minimum wage to $10.10 by 2016.[…] Academic research has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs. […] Raising the federal minimum wage is an important part of strengthening the economy. A raise for minimum wage earners will put more money in more families’ pockets, which will be spent on goods and services, stimulating economic growth locally and nationally.
A $10.10 minimum wage is significantly above the average US cost of living. Unfortunately, the bill that would have lifted 4.6 million people out of poverty was blocked by the US Senate last April. President Obama decried the loss, stating, “By preventing even a vote on this bill they prevented a raise for 28 million hardworking Americans. They said no to helping millions work their way out of poverty. They told Americans like the ones who are here today that: you’re on your own.” The Democrats intend on reintroducing the bill in the near future. 71% of Americans support an increase, yet Congress has continued to stall on the issue.
After the bill failed, Republican Senator Dan Coats (Ind.) stated, “Raising the minimum wage creates winners and losers — it will raise the wages of some but result in job losses for many low-income workers. The true problem plaguing impoverished Americans is not low wage rates but a lack of good job opportunities.” Despite this claim, in the month following Seattle’s $11 minimum wage, King County, Washington unemployment dipped from 4% to a seven-year record 3.3%. Some jobs are lost from any minimum wage increase, but those are primarily from unsound business models, and the greater economic activity more than makes up for those losses. The government estimated 500,000 jobs would have been lost by the increase.
Featured image: Bryan Watson, left, and Seattle City Councilmember Kshama Sawant at a March 15, 2014 minimum wage march. (AP Photo/seattlepi.com, Joshua Trujillo)