Federal Minimum Wage: The Case for Increasing It

The federal minimum wage, stagnant since 2009, urgently needs an increase to reflect today's living costs.

### The Case for Raising the Federal Minimum Wage: A Look at History and Current Perspectives
* 🕰 The last increase in the federal minimum wage occurred in 2009, setting it at **$7.25 an hour**, which equates to just **$15,000 a year**, below the poverty level for families.
* 📈 Since its inception in 1938, the federal minimum wage has steadily risen, yet it has **stagnated in recent years**, leading states like Arizona and California to establish their own **higher wage standards**.
* 💼 Many businesses have begun paying more than the federal minimum to attract workers, with companies like Walmart offering **starting wages of $14 an hour**, reflecting the market's demand for labor.
* 📊 Evidence suggests that raising the minimum wage could benefit not just low-wage workers but also the economy, as **increased earnings allow consumers to spend more**, which can **support local businesses**.
* 🔍 Although there are concerns about potential job losses, historical data from Seattle shows that after raising its minimum wage in 2014, businesses maintained a **survival rate of 99.3%**.
* ⚖ The Congressional Budget Office indicates that a higher minimum wage could **lift families out of poverty**, although it may also lead to some job losses, particularly for **less experienced workers**.
* 💰 As discussions about wage increases continue, proposals have shifted from **$15 to $17** due to inflation, highlighting the ongoing debate about finding a **fair and effective wage level**.
* 🗓 While an increase in the minimum wage is unlikely this year, it remains a topic of interest for future discussions, with figures like **Kamala Harris advocating for change in the coming years**.

Think back to the year 2009. Barack Obama had just been elected. The original Gossip Girl was still on the air, and Lady Gaga was inescapable. That was also the last time the federal minimum wage was increased. It's hard to imagine that in this day and age, $7.25 an hour is a livable wage. That's just $15,000 a year, and it's well below the poverty level for families. So is a minimum wage hike on the table when a new president takes over the White House? The federal minimum wage was first implemented in 1938 under FDR. Back then, it was just 25 cents an hour. It's steadily risen over time since, but Business Insider's Emily Stewart says in recent years, it's been stuck, and states and cities have put their own wage standards in place. Arizona's minimum, for example, is $14.35.

California's is $16, and West Virginia's is $8.75. But lots of businesses nowadays are paying more because the market demands it. They've had to increase pay to compete for workers and just to get them in the door. Just look at Walmart. Workers there now start at $14 an hour. You hear stories about people going by fast food restaurants in Texas, or really, pick your state or city, and seeing ads for $14, $15, $16 outside of fast food restaurants. It is really tough to pay the $7.25 today. Low-wage workers generally make more than their state's minimum wage basically everywhere. Raising it would lock in gains for workers, even in the event of a downturn. And there are spillover effects to hiking pay that would help more than the lowest-paid people. Every time anybody talks about raising the minimum wage, businesses act like the sky is falling.

All hell will break loose, that they will have to lay everyone off, that they will all shut down. But much of the evidence suggests that's not the case. When people have more money in their pockets, they can spend it at the grocery store, at the restaurant down the street. After Seattle raised its minimum wage in 2014, its businesses had a 99.3% survival rate. And the labor market wasn't as strong as it is now. Research suggests a higher minimum wage can increase worker productivity and lower turnaround costs for businesses because better-paid workers stick with their employers longer. I don't want to ignore the risks here. In Seattle, some workers did see their hours go down as businesses tried to compensate for having to pay them more, though most of them still did see an increase in their net pay, and less experienced workers, teens in particular, had a harder time finding jobs.

The Congressional Budget Office has this calculator that lets you play around with its estimates of the effects of a federal minimum-wage hike. It predicts a higher minimum wage would lift families out of poverty, though it also anticipates some job loss depending on how high the wage is. You can understand why that's scary for workers. Higher pay only helps if you keep your job. Still, more recent hikes, like California's new $20 minimum wage for fast food workers, haven't put tons of people out of work. There could be an impact on consumers, too, because businesses pass some wage increases into their prices. Let's say your burrito costs 10 cents more, but that's because the guy behind the counter who's making that burrito is making a living wage, and that feels like a worthwhile trade-off to me. It's impossible to predict exactly what a higher federal minimum wage would do. A lot of the effect would depend on the labor market,

competition, geography, and obviously the amount. For a long time, progressives were pushing for $15. They've now increased that to $17 because of inflation. It's hard to know the right amount, but I do think, you know, you have to figure in Washington, supposedly the land of compromise, there's really a ton of space between $7.25 and $15 or $17, and they could pick something in there that might make sense. It's unlikely minimum wage will be increased this year, but it could be on the agenda in 2025. Kamala Harris has been talking about raising it. So maybe next year it will be brought up again.

Here’s What Would Happen If We Raised Minimum Wage | Business Insider Explains | Business Insider

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25 an hour since 2009, well below the poverty level for families.

While the federal rate has remained stagnant, states and cities have implemented their own higher wage standards, with Arizona at $14.

Many businesses are now paying more than the minimum wage to compete for workers.

Raising the minimum wage could lock in gains for low-wage workers and have positive spillover effects for others, but businesses often resist such changes.

Raising the minimum wage has not led to widespread business shutdowns or layoffs, as seen in Seattle's 2014 wage increase with a 99.

A higher minimum wage can boost worker productivity and reduce turnover costs, although some workers may experience reduced hours.

While there are potential job losses and increased consumer prices, recent wage hikes, like California's $20 minimum for fast food workers, have not significantly impacted employment levels.

Progressives have raised their minimum wage demand from $15 to $17 due to inflation.

There is a significant gap between the current minimum wage of $7.

25 and the proposed amounts, suggesting a potential compromise.

While an increase is unlikely this year, it may be revisited in 2025, with Kamala Harris advocating for the raise.