The fight to raise the minimum wage caught a big wave of momentum this week as President Barack Obama endorsed a pay increase after voters pledged support in two key elections.
The White House confirmed Thursday that Obama was backing an effort to increase the minimum wage to $10.10 an hour, which is higher than the $9 an hour proposal he championed in his State of the Union address last winter.
The announcement comes just days after voters in New Jersey approved a $1 increase in the state’s minimum wage to $8.25 an hour. And when all the votes are counted, residents of a suburban Washington town, SeaTac, likely pushed the minimum wage up to an eye-catching $15 an hour for about 6,500 men and women who work at or near Seattle-Tacoma International Airport.
“We’re talking about a $15-an-hour minimum wage,” said Tsedeye Gebreselassie, staff attorney for the National Employment Law Project, which is helping lead national efforts for a minimum wage increase. “That’s a message that people think the $15 minimum wage is fair and what you need to survive. And business can absolutely afford it. It’s a big deal.”
Those results were expected to spur Obama to renew calls for a federal minimum wage hike. He did so Thursday by publicly supporting a proposal introduced this summer by Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., to raise the federal minimum wage to $10.10 per hour and index it to inflation. But the proposal is not expected to gain much traction in today’s divided Congress. And many Republicans feel it would kill job growth.
Campaigns are spreading across the country, as more workers find themselves in low-wage jobs coming out of the Great Recession. Of the 1.9 million jobs created during the recovery, 43 percent have been in the low-wage industries of retail, food services and employment services, according to a recent National Employment Law Project study.
This summer, thousands of fast food restaurant workers across the country dropped their spatulas and picked up signs calling for super-sized wage hikes.
Tyree Johnson, 45, stood outside a McDonald’s restaurant in downtown Chicago with a sign that read: “We are worth more.”
He makes $8.35 an hour, just 10 cents over the Illinois minimum wage.
Johnson has a room at a men’s hotel in downtown Chicago, which he pays for by cooking and cleaning at the fast food giant. He’s worked at McDonald’s for more than two decades.
It’s a check-to-check lifestyle, he said. But if the minimum wage were raised to $15 an hour, as he hopes, he could get an apartment and wouldn’t have to depend on his aunt for help, he said.
“The only times I’ve gotten a raise is when they increased the minimum wage,” he said.
New Jersey became the fourth state to raise its minimum wage this year after New York, Connecticut and California, buoying the hopes of supporters elsewhere.
But opponents like House Speaker John Boehner, R-Ohio, and the National Federation of Independent Business say an increase would only make it harder for small businesses to hire people.
“Small businesses clearly have been under financial pressure,” said Mark Zandi, chief economist at Moody’s Analytics. “They got hit in the recession hard and recovered more slowly than big companies and midsize companies. And the minimum wage will clearly hurt them more.”
Instead, Zandi thinks more changes could occur on the state level. Keep an eye on the Northeast and West Coast states, he said, where politics are more liberal and wages are higher.
An extra dollar or two increase in the federal minimum wage will have less of an impact – and therefore opposition – when workers in low-wage jobs are already making more than proposed increases.
A minimum wage increase would likely be more significant in the South, where wages are lower, and it would affect more workers. In fact, South Carolina and four other Southern states have no local minimum wage law. And while Georgia’s local minimum wage is $5.15, companies are required by law to pay the higher $7.25 federal rate.
Zandi does not expect too many municipalities to follow in SeaTac’s footsteps out of fear that local businesses will jump town borders with their tax dollars. SeaTac is a special case, with a major business, the airport, unlikely to move anytime soon.
By and far, voters support minimum wage increases. A Gallup poll in March found that seven in 10 Americans would vote for raising the minimum wage to $9 per hour.
If organizers can get enough signatures, a minimum wage hike is expected to be on the November 2014 ballots in Alaska, Idaho and South Dakota, according to the National Employment Law Project. And at least 10 states – including Illinois, Washington and Massachusetts – have active minimum-wage campaigns.
With the economy sputtering along and many family incomes continuing to decline, it’s no surprise that voters are sympathetic to those making the least. But Douglas Holtz-Eakin, a former Congressional Budget Office director, sees the votes more as “a triumph of good intentions over good economics.”
The minimum wage may not destroy jobs, he said, but it does stop many businesses from hiring – a top national priority. The result is that those with jobs benefit, but not those without jobs.
Obama may use the opportunity to turn up the heat on the issue, but Holtz-Eakin expects it’ll be to make Republicans look unsympathetic to poorer Americans, and not because it’s a legitimate economic fix.
“I can’t imagine that his economic advisers are saying, ‘Great idea,’” Holtz-Eakin said. “They need to do better from an economic point of view. And this is not a pro-growth policy.”