The federal minimum wage has been a hot topic of debate and discussion for many years, with activists, politicians, and economists all weighing in on the potential impact of raising the minimum wage. Recently, activists in Washington, D.C. gathered to demonstrate their support for a $15-per-hour minimum wage and tips for restaurant workers. This demonstration came in the midst of a debate over the federal minimum wage, which has been stuck at $7.25 per hour for the past 15 years.
The federal minimum wage was last raised in 2009, and since then, many states have taken matters into their own hands by enacting minimum hourly pay rates that are higher than the federal minimum wage. However, there are still 20 states where the minimum wage is no higher than the federal level, including states like Alabama, Georgia, and Texas. This discrepancy between state and federal minimum wages has led to a patchwork of regulations across the country, with some workers earning significantly more than others simply based on where they live.
One of the key issues surrounding the federal minimum wage is the subminimum wage for tipped workers, which is currently set at $2.13 per hour. This means that tipped workers must rely on tips to bring their earnings up to the $7.25 per hour federal minimum wage. However, in Michigan, lawmakers recently took a significant step by eliminating the subminimum wage for tipped workers, making it the first state in more than four decades to do so.
On the campaign trail, Democratic presidential nominee Kamala Harris has been vocal about her support for raising the federal minimum wage. She has not specified how high she wants to raise the minimum wage, but she has praised states that have raised the rate to at least $15 per hour. Harris has also expressed her desire to eliminate taxes on tips for service and hospitality workers, a move that could have a significant impact on workers in these industries.
In 2021, Congressional Democrats attempted to raise the federal minimum wage to $15 per hour as part of a broader Covid relief package. However, these efforts ultimately failed, highlighting the challenges of passing such legislation through a one-party majority. Former President Donald Trump also expressed concerns about raising the federal minimum wage, citing potential negative impacts on small businesses.
Despite these challenges, there is a growing consensus among small business owners that raising the minimum wage could have positive effects. A CNBC survey found that 61% of small business owners support raising their state’s minimum wage, although many also expressed concerns about the potential impact on their ability to afford to pay workers. However, advocates argue that raising the minimum wage could lead to stronger consumer buying power, as workers with higher wages are more likely to spend that money, thereby boosting businesses.
Holly Sklar, CEO of Business for a Fair Minimum Wage, emphasizes the importance of recognizing the connection between a higher wage and stronger consumer buying power. She points out that when workers earn higher minimum wages, they are more likely to spend that money, which in turn benefits businesses. Ben Zipperer, senior economist at the Economic Policy Institute, also highlights the importance of raising the minimum wage to provide low-wage workers with economic security.
Raising the federal minimum wage to $15 per hour could have a significant impact on millions of workers across the country. Zipperer estimates that such a change would increase the incomes of about 20 million workers, including those who are currently earning hourly pay slightly above the federal minimum wage threshold. While there are concerns about the potential impact on businesses, Zipperer argues that raising wages can actually make it easier for companies to recruit and retain workers.
Some companies, such as Target and Walmart, have already taken steps to raise their minimum pay thresholds in response to tight labor market conditions. Target, for example, has set its minimum pay at $15 per hour, while Walmart has set it at $14 per hour. These moves suggest that some companies recognize the benefits of paying workers higher wages, both in terms of employee satisfaction and overall business success.
Overall, the debate over the federal minimum wage is complex and multifaceted, with various stakeholders weighing in on the potential impacts of raising the minimum wage. While there are concerns about the potential impact on businesses, there is also growing support for raising the minimum wage to provide workers with greater economic security and purchasing power. As the debate continues, it will be important to consider the perspectives of all stakeholders and work towards a solution that benefits both workers and businesses alike.