Efforts to raise both the federal and state minimum wage continued this month. At the federal level, information from the nonpartisan Congressional Budget Office (CBO) reported a change could have wide-reaching positive and negative effects.
“The $10.10 option would have substantially larger effects on employment and income than the $9.00 option would – because more workers would see their wages rise; the change in their wages would be greater,” concluded the CBO in their 39-page report. “Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent.”
Even though 500,000 could become unemployed as employers decrease their work force to increase the minimum wage, a total of 900,000 people would move to the positive side of the poverty threshold, where 45 million people are currently making less than $23,550 a year for a family of four.
With the $9 option, the CBO found that anywhere from 100,000 to 1 million people could end up unemployed. However, roughly 7.6 million low-wage earners would see an increase totaling about $1 billion extra dollars for families living in poverty. With the $9 option, 300,000 people would be lifted out of their current economic situation below the poverty threshold.
Though the minimum wage debate may seem new, the fight for a livable wage has been repeated since 1938, when the Fair Labor Standards Act set a minimum wage for workers at 25 cent. It has been revised, amended, and broadened numerous times, and now includes service workers, retail, transit, construction, health employees, and many others.
“During the 1960s a full-time minimum wage income was enough to keep a family of three above the federal poverty line,” said David Cooper, an analyst with the Economic Policy Institute, who testified Feb. 17 in front of the Maryland Senate. “Today’s minimum wage of $7.25 is worth about 23 percent less than what it was worth in the late 1960s. The value of the minimum wage at its high point in 1968 equaled about $9.40 in today’s dollars.
Cooper said an increase could positively affect the entire economy. “More broadly, when you raise the minimum wage, what you’re essentially doing is shifting income from business owners or corporations to low-wage workers,” Cooper told the AFRO. “We know that low-wage workers are more likely spend every additional dollar that they receive just because they have to in order to pay their bills. You’re transferring money from entities less likely to spend it and more likely to save it, to entities more likely to spend it all right away. That actually can boost consumer spending and provide a modest boost to overall economic growth.”
In Maryland’s General Assembly, both the House and Senate are working on measures to increase the federal minimum wage for workers. In Montgomery and Prince George’s counties lawmakers have already decided to raise the minimum wage to $11.50.
Del. Aisha Braveboy, who sponsored HB 187, said lawmakers are working out problems with the bill, but believes it will get a committee vote by early to mid-March and then proceed to the House floor. Issues being addressed are how to deal with counties that have already adjusted their minimum wage, how Maryland will handle inflation, and a better system to compensate workers who earn tips.
Currently, employees who earn tips are paid 50 percent of the minimum wage.”In theory, the employee would make up the rest of that in tips,” Braveboy said before acknowledging that tips don’t always add up. “The proposal is to raise that credit to 70 percent of the minimum wage. Instead of the employer paying 50 percent they would pay 70 percent.”
While lawmakers haggle over details, a group of 19 business owners in the Baltimore-Washington, D.C. area isn’t waiting for laws to force a pay increase. In a move focused on helping their employees earn livable wages, members of the President’s Roundtable, a group of minority business owners, announced plans to raise the minimum wage for their employees – even if a bill isn’t passed.
“We want to be very clear that this is not a political for us – it’s a human rights issue,” said Sheila Brooks, leader of the President’s Roundtable. “Of the 19 members, we have more than 1,200 employees collectively. Each and every one of us did agree to raise the minimum wage to $10.10 an hour by 2015 in support of House Bill 187.”
Brooks is the founder and operator of SRB Communications, a communications agency, but one-third of the Roundtable members are contractors, employing hundreds of blue-collar construction workers. “We want to lead the way so that we can hopefully inspire other businesses to pay the living wage. We would like to challenge other business owners – particularly minority business owners – to do what’s right for their community, for the economy, and our country, that is to raise the minimum wage to $10.10 an hour.”