Obama’s Wage Crusade: Why the U.S. Sucks at Fair Pay
President Barack Obama is serious about raising the minimum wage, and he’s been serious about it for a long time. On the campaign trail in Des Moines, Iowa, in November 2007 (this was back before the American economy seized) Obama advocated increasing the federal minimum wage to $9.50 per hour and indexing it to inflation by 2011. A higher minimum wage, he argued, alongside tax relief for low-income parents and the elderly, would help the poverty-stricken stand on their feet and help the poor move into the middle class.
But between financial crisis and political gridlock, Obama failed to make good on his initial promise. The current federal minimum wage still sits at $7.25, which it was raised to in 2009 at the end of a three-stage bill passed by a Democratically controlled Congress in 2007. That year, when Obama was first making his case on the national stage, there were more than 38 million people living in poverty — 13% of the population. A lot of these people (nearly one in five) were kids. And among seniors, the poverty rate was about one in 10.
Today, the poverty situation is actually worse than it was in 2007. According to the Census Bureau, the official poverty rate in 2013 was 14.5% — 45.3 million Americans. The nearly one-in-five poverty rate among kids has increased to a solid one-in-five — 19.9%, about 14.7 million kids — although the poverty rate among seniors has remained approximately the same. And because of this, President Obama is still making his case about the minimum wage. In fact, he’s speaking (and acting) more deliberately now than he was on the campaign trail.
Last year, for example, when Obama delivered the State of the Union Address, he announced that he would be using the presidential trump card, the executive order, to increase the minimum wage that federal contractors pay their federally funded employees to $10.10 per hour. He underscored the message behind the action, “If you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.”
In October, the Obama Administration released this video, crunching the president’s argument down to two minutes.
One of the bills for which the president gave his support is S.460, the Fair Minimum Wage Act of 2013. The bill was introduced by Sen. Tom Harkin (D-Iowa) in March 2013, but never made it out of committee. The bill proposes increasing the federal minimum wage in increments up to $10.10 per hour and then indexing it to inflation after that.
Why “we suck” at the minimum wage
At a Bloomberg News event earlier in October, Labor Secretary Tom Perez offered what is probably the most concise summary of the wage situation in the U.S. — “we suck.”
Let’s take a moment to appreciate that. The U.S. Secretary of Labor, the ultimate arbiter of employee-employer relationships, has taken an emphatic pro-wage position. This not only aligns him with the Obama Administration and most of the Democratic party on this issue, it also puts him on the front lines of the conversation, which, at this point, is quickly tripping into a familiar kind of partisan political warfare. The Fair Minimum Wage bill was shot down by Republicans, and Perez’s comments were directed at a Republican, Governor Chris Christie of New Jersey.
According to Bloomberg News, Governor Christie had complained that he was “tired of hearing about the minimum wage” at a Chamber of Commerce event earlier in the month. He argued that Americans (parents in particular) “aspire to a greater, growing America, where their children have the ability to make much more money and have much greater success than they have, and that’s not about a higher minimum wage.” Governor Christie prescribes to the same general conservative economic principles as the rest of his party, which has historically been critical of wage laws.
But to Perez’s point, we do suck at the minimum wage. At least, we suck at the minimum wage if we use the right measuring stick. Perez pointed to the fact that in the U.S., the ratio of the minimum wage to the median wage was 0.27 in 2013. This puts us pretty much at the bottom of the pile when compared to other OECD member nations.