By the numbers
1.8 million: Number of Americans who earn the federal minimum wage of $7.25 an hour.
2.5 million: Number of Americans who earn less than the minimum wage (due to exemptions).
1.15 million: Number of women who earn the federal minimum.
955,000: Number of young people — between the ages of 16 and 25 — who earn the federal minimum.
595,000: Number of full-time workers who earn the federal minimum.
217,000: Number of minimum wage workers in the states of Ohio, Illinois, Indiana, Michigan and Wisconsin.
Source: Bureau of Labor Statistics
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Since that day in 1938 when President Franklin D. Roosevelt signed the first federal minimum wage into law — a princely 25 cents an hour at the time — this simple concept has sparked a torrent of complex arguments.
To Democrats, it is a matter of fairness and economic common sense.
“It’s time to give America a raise,’’ President Barack Obama said last week in Maryland.
“It’s time to give all Americans who are working low-wage jobs a raise,’’ Sen. Sherrod Brown, D-Ohio, said during a conference call last week with reporters.
But many Republicans have a different take. They see a minimum wage increase as an illusory promise that leads to lost job opportunities for the very people it is designed to help.
“Twenty percent of young workers are unemployed, a third of young African-American workers are unemployed and the president wants to raise the minimum wage by 40 percent,’’ said Michael Strain, resident scholar at the conservative-leaning American Enterprise Institute in Washington. “It seems to me that with how terrible our labor market is right now, raising the minimum wage by 40 percent — which will increase the cost of hiring those workers by 40 percent — is not the right thing to do.’’
At his State of the Union address last week, Obama proposed increasing the federal minimum from $7.25 an hour, where it has stood since 2009, to $10.10 an hour.
But in a nod to political reality, Obama plans to sign an executive order to raise the federal minimum wage for workers whose companies receive federal contracts. There is little reason to believe House Republicans will consent to a broader increase, which would impact most workers who currently earn less than the federal minimum.
Modest numbers
Although “it’s time to give America a raise’’ has become the Democratic war cry, the number of Americans receiving the minimum wage is barely a fraction of the overall work force.
In 2010, the Bureau of Labor Statistics reported that of 73 million people age 16 or older paid an hourly rate, only 1.8 million earned the federal minimum wage. Because federal law contains some exemptions, including for workers at small farms along with baby sitters, newspaper delivery people and others, another 2.5 million work at jobs paying less than the minimum wage.
Nearly one million of those earning the federal minimum are between ages 16 and 24. Of teenagers paid by the hour, 25 percent earn at or below the federal minimum wage.
Despite those modest numbers, an increase in the federal minimum could boost the hourly wages of as many as 30 million people, according to the Economic Policy Institute, a progressive organization in Washington.
The reason is many states, including Ohio, have a higher minimum wage than the federal law requires but lower than Obama’s proposed $10.10 an hour. Ohio workers currently paid the state minimum wage of $7.95 an hour would see a large pay increase if Congress approved a raise in the minimum wage.
Pitched battle
Roosevelt’s minimum wage proposal encountered opposition just as Obama’s proposed increase has, and many of the arguments for and against are little-changed from the days of fireside chats.
“It’s good for the workers who see their wages increase,’’ said David Madland, director of the American Work Project at the Democratic-leaning Center for American Progress in Washington. “It has a ripple-through effect that boosts demand.’’
“For the past 30 years, the dominant economic idea has been the trickle-down effect,’’ Madland said. “If you make things easier on the wealthy and business, the benefits will trickle down. The alternative model is a strong middle class creates a strong economy by building up the workers in the middle,’’ which he said creates “positive impacts on the larger economy.’’
But conservatives and a broad swath of economists say there are risks to raising the minimum wage. In a 2012 article for the CATO Institute, Mark Wilson, a former deputy assistant secretary for the Labor Department, wrote that “economists agree that business will make changes to adapt to the higher labor costs after a minimum wage increases.’’
Those higher costs, Wilson wrote, “will be passed on to someone in the long run; the only question is who. The important thing for policy makers to remember is that a decision to increase the minimum wage is not cost-free; someone has to pay for it.’’
Michael Saltsman, research director at the Employment Policies Institute, a conservative non-profit organization in Washington, warned of the “unintended consequences,’’ such as employers scaling back hiring because of being forced to pay larger wages.
“It might not be a great poverty reduction strategy,” he said. “It might actually make some people worse off.”
William Even, a professor of economics at Miami University, said “clearly, there are some trying to survive on a minimum wage without any other support from household members.’’
“But the thing is if you really want to fight poverty, there are much more targeted ways of doing this than using the minimum wage,’’ he said. In particular, he cited the earned income tax credit, a refundable tax credit for low-and-moderate working people, is a far more effective way to get money into the hands of people.
Claims of job loss are disputed by many Democrats. In his speech in Maryland, Obama pointed out that Costco pays an average hourly wage of $20 an hour. Obama said Costco’s chief executive “knows that Costco is going to do better, all our businesses do better when customers have more money to spend.’’
Other progressives, such as Madland, say giving workers more disposable income helps the economy as a whole. A recent study by Madland and other scholars at the Center for American Progress is somewhat inconclusive on whether raising the minimum wage leads to job loss.
The report examined the 91 cases between 1987 and 2012 when a state raised its minimum wage when the unemployment rate was at 7 percent or higher. In 47 of those examples, unemployment dropped during the next year, the study found.
Rep. Marcia Fudge, D-Cleveland, said public opinion will eventually win the day for advocates of a minimum wage hike.
“A hue and cry from the general public is the only thing that’s going to make this happen,” she said. “We all believe firmly you should not work 40 hours a week and live in poverty. It’s going to take the general public to move Congress and it is something that can be done and has been done many, many times.”
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