Last time the federal minimum wage was raised was in 2009 from $6.55 to $7.5 under Barack Obama. I believe at the time both the House and the Senate were run by the Democrats.
Looking at how minimum wage remains the same for such long periods its hard to understand for a lot of us why such a system exists. In many countries, minimum wage is yearly updated based on mostly inflation. In the USA, inflation is relatively low but not non-existent. Simply put, the inflation rate between 2009 and today is about 24%.
Of course, I can hear some of you say that the free market have been raising the wages in average in a similar amount or more. While less and less people work at minimum wages, there are still a sizeable group that occupies this position. The group that lives near the minimum wage is even larger.
Then there is the living wage. Obviously, wages differ from state to state and depends a lot on where you live even within the state. However, its safe to say that the current minimum wage doesn't even cover the lowest region. To check what the living wage is in your area see this project by MIT. Let's check living wages for 4 places for example:
- Los Angeles-Long Beach-Anaheim, CA: $19.22 for a single adult.
- Houston-The Woodlands-Sugar Land, TX: $14.29 for a single adult.
- New York-Newark-Jersey City, NY: $20.00 for a single adult.
- Boston-Cambridge-Newton, MA: $19.17 for a single adult.
Recently, an effort to put a raise in the latest stimulus bill failed to bear fruit:
Raising the US minimum wage: what just happened and what comes next?
So, what I want to discuss is, why not tie federal minimum wage to inflation? We all know the concerns with raising the minimum wage from one side of aisle while the other side believes that those concerns are overblown. We can discuss various examples on how raising the minimum wage effects inflation in return as well. Pretty much anything directly related to minimum wages can go here.What happened?
The idea of pushing up the minimum wage in stages to $15 in 2025 was included in Joe Biden’s $1.9tn stimulus package that seeks to support vaccine distribution and an extension of unemployment benefit among other pandemic provisions.
The minimum wage element of the bill was a very big deal. It would increase the incomes of 27 million Americans, with almost 1 million people lifted out of poverty, according to the Congressional Budget Office.
The Democrats have decided to fast-track the bill as a way of avoiding Republican opposition through a channel known as “budget resolution”. That would provide for a simple majority vote in the Senate, avoiding the dreaded filibuster where 60 votes have to be attained – an impossible task given Republican intransigence within the new evenly split 50-50 Senate.
The snag is that budget resolution is subject to strict limits on how it is applied, designed to prevent political leaders packing the bill with all sorts of goodies entirely unrelated to federal revenue or spending. The unelected keeper of those restrictions is Elizabeth MacDonough, the grandly titled Senate parliamentarian, who announced on Thursday that in her reading of the rules the $15 minimum wage was extraneous to budget legislation and thus had to be removed.