Workers with low-paying jobs in Colorado, Montana, Ohio, or Washington, just got a bit of good news: These four states announced minimum-wage increases that go into effect at the beginning of next year.
In total, 10 states adjust minimum wages every year based on the inflation rate. In addition to the four above, Arizona, Florida, Missouri, Nevada, Oregon and Vermont all make cost-of-living adjustments. (Oregon announced a 30-cent increase for 2012 last month; the remaining states haven’t announced their adjustments yet.)
Those workers will be making less in real (i.e. inflation-adjusted) dollars than those who held minimum wage jobs in 1968, when the minimum wage hit its peak value before beginning a four-decade slide. They’ll have plenty of company, though: Research from the National Employment Law Project shows that the few jobs the U.S. has added since the recession officially ended have overwhelming been low-wage positions.
Working minimum wage during the Summer of Love would have earned you $1.60 an hour; in today’s dollars, that’s equivalent to $10.42. Just 10 states index their minimum wages to the inflation level, which helps make up for increases in the cost of living, says Tsedeye Gebreselassie, staff attorney at the National Employment Law Project.
“The challenge is we’re already at a place where the minimum wage in all places is so far below what its historic value is,” she says. The highest minimum wage, in Washington, is still just $9.04 — around a dollar per hour less than what a low-wage worker would have made in 1968.
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The minimum wage increases in these four states range from 28 to 37 cents per hour. That’s $582 and $770 a year for someone who works full-time. Only 18 states have minimum wages above the federal threshold of $7.25 per hour, which comes out to a bit more than $15,000 a year for full-time work, or about $7,000 below the poverty line for a family of four.
Currently, government data show that 6% of all hourly workers make no more than that federal minimum wage. (Workers who also earn tips often make less than that.) Gebreselassie says that this number is likely to rise because the industries that are adding jobs right now are those that tend to pay very low wages, such as retail and food service.
Since the recession began, she says, wages for low-paying jobs — those classified as positions that pay $13.52 or less an hour — have actually declined by 2.3 percent. “The job growth, such as it is, during this recovery is being dominated by jobs that are lower wage.”
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Some politicians and business groups object to increases in the minimum wage, arguing that it costs jobs. In response, Gebreselassie points to a research report published by the Institute for Research on Labor and Employment at the University of California. Researchers looked at neighboring counties that were located in different states (and, as a result, had different minimum wages) and compared their employment rates. “We compare all contiguous county-pairs in the United States that straddle a state border and find no adverse employment effects,” the report’s authors write.
Gebreselassie says more states are coming around to this viewpoint, albeit slowly. A handful of states, including California, Massachusetts, Maryland and Illinois, are considering legislation to raise their minimum wages and add future cost-of-living adjustments. Some additional states are considering taking up similar legislation next year, she says.