Over the past year, the discussion of income inequality has dominated both national and state level political debates. It has been nearly five years since the federal minimum wage was upped from $6.55 to $7.25 per hour, which puts millions of Americans’ annual incomes at $15,000.
In all, 19 states and the District of Columbia have chosen to enact minimum wage standards above the federal level. The highest, Washington State, pegs its minimum wage at $9.32 an hour, or a gross income of nearly $18,000. This is still well below the poverty line for a family of four, which is currently recognized as $23,550 annually.
One thing is for certain: a minimum wage is no longer a living wage for the average Utah family. Controversy lies, however, if you go any further down the road than that.
Opponents of raising the minimum wage argue that the floor on wages harms the market, by creating an artificial constraint that prevents hiring at full employment. Supporters of the minimum wage argue that if a person is willing to put in a day’s worth of labor, they should not be forced to live in poverty. The latter school of thought appears to hold sway in United States politics. No less than 30 states will be considering some sort of minimum wage hike during their respective legislative sessions, and a recent Gallup poll shows that 76 percent of all Americans (not just those who are making minimum wage) would vote to raise it higher.
In Utah, Representative Lynn Hemingway (Democrat – Salt Lake City) is taking up the charge with HB 73 – Living Wage Amendments.
Hemingway is proposing that the state’s minimum wage be raised from the current federal minimum of $7.25 per hour to $10.25 per hour for regular employees and $3.13 an hour for tipped employees such as restaurant servers (the current rate being $2.13 an hour + tips). Had federal minimum wage standards kept pace with inflation from where they were at 40 years ago, the current minimum wage would be set at $10.74 an hour.
If successful, the bill would most likely improve the conditions of those currently working in minimum wage jobs, even when adjusting for inflation, especially given that many adults with families (not just teens) are now in these jobs. The issue of helping or harming small business ones is always a complex one, however, as arguments persist on both sides that companies are harmed by higher wage costs but bolstered by more people willing to stay at their jobs and spend the extra money they earn. Some studies suggest that states have seen positive job growth effects when they raised their minimum wages above the national standard.
Tthe Salt Lake Chamber of Commerce argued in March of last year that “Raising the minimum wage actually has the opposite effect [of helping low wage earners]. It will cost some of the most vulnerable workers hours they count on and it will cost some their jobs….This idea disproportionately hurts the low-wage workers it is trying to benefit and it makes it more difficult for businesses to hire young people making their first entrance into the workforce.” Conversely, RaseTheMinimumWage.com counters by stating that “A recent rigorous study by economists at the University of California examining the impact of minimum wage increases on teen unemployment found that even minimum wage increases implemented during times of high unemployment…did not result in job losses for teens or slow employment growth.” They go on to contend that “the best economic research, and real world experiences with minimum wage increases, confirms that raising the minimum wage does not cause job loss. The decade following the federal minimum wage increase in 1996-1997 ushered in one of the strongest periods of job growth in decades.”
But, regardless of studies or research, the topic of raising the minimum wage lives primarily in the political sphere, and not the economic. To that end, businesses and their lobbyists are generally opposed to raising the minimum wage, and Utah typically follows their lead. It is doubtful that Hemingway’s legislation will make it very far in the process, and even less likely that it will succeed.
Based on the overall amount of research available—and considering the benefits to both the minimum wage workers as well as the economic benefits that will come to all when the buying power of low-income workers is increased—it does appear to be a smart idea for Utah to look into raising the minimum wage above the federal standard. But, ultimately, support for this bill comes down to which side of the paycheck you are on.
To contact Representative Hemingway, click here or call 801-231-2153.
Impact on Average Utahn:
High Impact 5 . 4 . 3 . 2 . 1 . 0 No Impact
Need for Legislation:
Necessary 5 . 4 . 3 . 2 . 1 . 0 Unnecessary
Sound Legislation 5 . 4 . 3 . 2 . 1 . 0 Clunker