Richard Davis: Minimum wage increase is a question of fairness

Published: Wednesday, Sept. 4 2013 12:00 a.m. MDT

President Barack Obama speaks to media, as Susan Rice, National Security Adviser, left, and House Speaker John Boehner of Ohio, center, look to him in the Cabinet Room.

Associated Press

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With Labor Day just behind us, the issue of workers' wages has emerged again. A strike by fast food workers in a number of cities across the nation has centered attention on the issue of whether workers at the bottom of the income scale are being treated fairly. States are weighing whether to raise their minimum wage standards. For example, New Jersey voters will decide in November on increasing their state's minimum wage by one dollar.

As the debate over the minimum wage rages, it is important to consider who would be affected by a minimum wage increase. Opponents typically argue that the beneficiaries primarily would be teens who live at home and want extra income for frivolous items rather than basic needs like food and rent. Of course, a minimum wage increase directed at such a group, as much as they might enjoy it, would be unnecessary.

However, a recent demographic study of low wage workers finds another story. The Economic Policy Institute, which supports raising the minimum wage, found that the average age of a low wage worker is 35, not 17. Also, 88 percent of them are over the age of 20. In fact, over a third of them are over the age of 40. And more than 1 in 4 has children. Also, most of them (55 percent) work full-time, as opposed to the image of these workers as primarily high-school age dependents. And the average low-wage worker provides more than half the family's income.

One reason the average low wage worker is not the stereotypical dependent teen is the failure of the minimum wage to keep up with inflation. Though inflation has increased, wages have failed to do so. Therefore, as the poverty line rises with inflation, increasing numbers of working families with stagnant wages are ending up below it.

One proposed solution is to keep more young people in high school and provide better educational opportunities for those in low income categories. Certainly those actions should happen. However, despite the perceived image, the average low-wage worker is not a high school dropout. According to the Economic Policy Institute survey, only 21 percent of low wage workers lack a high school education, and over 40 percent have been to college. Most likely these are individuals who were laid off during the recession or were unable to find a job except for one working at a low wage.

To help the plight of low wage workers, President Obama has proposed increasing the minimum wage from $7.25 per hour to $9.00 per hour. Yet, even this new minimum wage would not bring a family of three above the poverty line of $19,530. A $9-an-hour minimum wage would pay less than $19,000 annually. A bill in Congress, called the Fair Minimum Wage Act of 2013, was proposed to raise the minimum wage to $10.10 over three stages. That bill would come closer to lifting low wage workers out of poverty and providing a decent wage.

Both the proposed Fair Minimum Wage Act and President Obama's proposal also do something important for low wage workers. They would index increases in the minimum wage to inflation. That means the minimum wage would automatically increase as inflation increases. No longer would the minimum wage lag significantly behind inflation. For example, in real terms, the minimum wage is worth $2 less today than it was in 1968.

Opponents may argue that businesses cannot afford raising the minimum wage unless they can get more productivity from workers. In other words, workers shouldn't be paid more unless they are more productive. That is a valid point.

However, even on that basis, the minimum wage should be increased. According to the Heritage Foundation, worker productivity has increased 100 percent over the past 40 years, but workers' pay has increased only by 77 percent. Other economists point to an even greater disparity. But the point is that already workers are not being compensated for their increased productivity.

Raising the minimum wage is not about giving teens more disposable income. It is about treating workers fairly and providing the compensation workers deserve.

Richard Davis is a professor of political science at Brigham Young University. His opinions do not necessarily reflect those of BYU.

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