Minimum Wage, Less than the minimum

By: Jon Thomas-Weger, President

Central New Mexico Labor Council, AFL-CIO

In an article in Tuesday’s Tribune ABQ BIZ,  J.D. Bullington expresses his support for an increase in the Federal minimum wage. He opposes State and municipal minimum wages higher than the federal minimum. He claims that these wages are set for political rather than economic reasons.  Then, Bullington floats a Cato Institute idea that would allow States to set minimum wages that are lower or higher than a federal Minimum wage.

J.D. goes on to state his opposition to pegging the minimum to inflation, but then predicts that if the Federal minimum is not raised it is inevitable that Albuquerque’s and/or New Mexico’s minimum wage will be raised above the current $5.15 per hour. Bullington finishes by urging a modest increase in the federal minimum and that New Mexico and Albuquerque should not go above the Federal rate.

Indeed, I agree with the writer, the federal minimum wage needs to be increased. This has not been done for nearly ten years, and given the current Congress, it is unlikely that the minimum will be increased any time soon. Indeed, most people, of all political stripes, realize the minimum wage is far too low, hence the rise in States and localities setting minimum wages well above the federal level.

The problem with the minimum wage is that it is far too low. In the late seventies the minimum was set at $3.35. This was raised a measly 90¢ in the Bush I administration and then after several years of trying, another 90¢ in 1997. The minimum remains at $5.15. When the minimum wage was first enacted in 1936 it was designed to allow a worker to maintain a family of four at a minimum standard of living.  Today, a minimum wager working 40 hours a week cannot even support herself, let alone any type of a family. That is why so many low-wage earners must work two or more jobs.

Indeed, the reasons for raising the minimum wage in New Mexico are economic. When the minimum wage was raised in 1997, New Mexico’s average income increased by 5.2%. This was a phenomenal increase. Similar increases were seen in other low wage states like Mississippi, Alabama and South Dakota.  Most workers in New Mexico receive low wages, somewhat higher than the minimum, but increasing the minimum has the tendency to push up other low wages, a substantial benefit for thousands of New Mexicans.

A significant increase, rather than a modest increase, would not only improve an individual’s or family’s economic situation, but would allow people to quit their second (and third) jobs, spend more time with their families and participate more fully in their children’s education. A significantly higher minimum would also relieve some of the burden on Medicaid and other aspects of the social safety net.

Most small, locally owned businesses would love to give their employees an increase, but can’t because they are forced to compete with other low wage employers like the fast food chains and discount department stores (read Wal-Mart). Indeed, it is the political power of these and other low-wage employers (like hotel chains) that have been able to use their political clout to keep the minimum wage at the barest minimum.

Raising the minimum wage is not only the right thing to do, it is good for small business, it is good for the community. In 1968 the minimum wage was $1.60 per hour. Adjusted for inflation, the minimum wage should be at least $8.82 per hour. For this reason, any new minimum wage legislation should be adjusted annually for inflation, just like Social Security.

And speaking of Social Security… Conservatives claim that by 2041 Social Security will no longer be able to pay full benefits. A significant increase in the minimum wage and indexing it to inflation would go a long way to changing that date from 2041 to infinity.

Raise the minimum wage at the Federal level. And, if not there, we have to do it here!

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