May 2023 | Volume 14, Issue 10

Read the full article from ABC News.

According to the article, just years after labor activists persuaded a handful of states to raise their minimum wage to $15 per hour, workers initially thrilled with the pay bump are finding their hard-won gains erased by inflation.

New York City resident Anthony Rivera, 20, who sorts packages at a United Parcel Service facility in Brooklyn, said he had to take a second job at a grocery store after his food costs soared.

“I was sitting at $15 an hour at UPS, and when it came to paying bills and buying groceries, it was starting to become not enough,” he said. “That led me to no other option than to pick up another job.”

New York, California, and Massachusetts are among states where pro-labor forces are now pushing proposals that, if approved, would boost minimum wages to $20 or more in the coming years.

Inflation has meant that something that cost $15 in 2012 — when labor activists adopted the “Fight for $15” slogan in a push for wage hikes — would probably cost almost $20 today, according to the U.S. Bureau of Labor Statistics.

But opponents to the wage hikes say they can be detrimental to small businesses, which already took a major hit during the coronavirus pandemic.

Cindy Lee, the owner of a bowling alley in Endicott, New York, said she is struggling to pay off loans taken out during the pandemic that kept her business afloat.

“All this cost all at once is just going to kill us. I will have to cut corners somewhere with employees if wages are raised,” said Lee, adding that she would also have to increase prices on bowling, food, and liquor.

The federal minimum wage in the United States has stayed at $7.25 per hour since 2009, but states and some localities are free to set higher amounts. Thirty states have chosen to do so.

Over the past decade, labor groups held out $15 as the target that would let low-paid workers sustain themselves within the 40-hour workweek. A growing number of states across the political spectrum have passed legislation that will take their minimum wage above that amount in the next few years, including Florida, Nebraska, and Illinois. Eleven states have phased in wage increases of $5 or more within the past decade.

Yet those gains were almost immediately tempered. Inflation in the United States hit a new 40-year high last summer after prices for necessities like gas and food soared. Supply chain issues resulting from the coronavirus pandemic, combined with Russia's invasion of Ukraine, have disrupted gas and food supplies, sending those prices skyward.

Labor activists are pressing for a new round of wage increases even as the old ones are still being phased in.

A bill in New York would raise the state’s minimum wage to $21.25 by 2026, and then adjust it each year going forward for inflation. Right now, minimum wage workers in New York City get paid $15, while the rest of the state is at $14.20.

In Massachusetts, one bill proposes to raise the wage every year until it hits $20 in 2027, up from $15 now.

And in California, where the minimum wage is currently $15.50 for all workers, legislation signed in September would have set the state on a path to raise wages for fast-food workers to $22 per hour. The law was met with heavy opposition from restaurant industry groups who led a successful effort to force it into a referendum vote in 2024.

Backers of a proposed wage increase in New York say they hope it will pass as part of the state budget, which is expected to be finalized in early April.

“You can't tell us that after the pandemic, that $15 is going to still be enough for us to keep food on our tables,” said state Senator Jessica Ramos, a Democrat who represents parts of Queens, said at a rally in Albany. “That's why we want $21.25, nothing less. The price of everything is going up except for wages.”

In her executive budget proposal, New York Governor Kathy Hochul, also a Democrat, proposed tying minimum wage increases to inflation, but with a cap on how much wages could rise in any one year.

Barry Nicholson, the owner of four retail businesses in Corning, a city by the Finger Lakes in New York, said a wage increase to $21.25 would be “a smack in the face to small businesses.”

“There is just no way I could handle that," said Nicholson, who owns two UPS stores, and women's accessories and modern home furnishings stores. “When you look at retail hospitality, we live and die by a couple of points at the end of the day. We’re not the big corporations everyone talks about.”

Discussion Questions

  1. Discuss the federal minimum wage law and how the federal minimum wage law relates to minimum wage laws in the various states.
    For those who support an increase in the federal minimum wage, to say that U.S. lawmakers have been “inattentive” to federal minimum wage law would most likely be an understatement.

    The current federal minimum wage is $7.25 per hour. This amount was last adjusted (increased) in 2009. Using a simple inflation calculator, $7.25 in 2009 equates to $10.20 in 2023, meaning that in terms purchasing power, the federal minimum wage has not kept up with an overall increase in prices since 2009.

  2. What is a “living” wage?
    A living wage is generally defined as the minimum income necessary for a worker to meet their basic needs.

    What constitutes a living wage varies from state to state, from a high of $21.99 per hour in Hawaii to a low of $14.85 in South Dakota.

    Obviously, the definition of a living wage cannot be precisely defined, since what constitutes a “basic need” is subject to interpretation. For example, is a cell phone a basic need?

  3. In your reasoned opinion, will recent state initiatives to increase the minimum wage successfully result in a “living” wage? Why or why not?
    This is an opinion question, so student opinions may vary. Your author is skeptical (realistic?) regarding whether such state initiatives will successfully result in a “living” wage. First, the cost of living is always a “moving target,” especially considering 40-year inflation highs post-COVID (The Federal Reserve is trying to address the inflation conundrum by increasing interest rates, but higher interest on home loans, car loans, etc. is in and of itself an additional cost, and the Federal Reserve has not yet met its target goal of reducing inflation to two percent per year).

    Second, an increase in the minimum wage may itself contribute to inflation, resulting in no discernible increase in purchasing power for minimum wage workers. Third, the issue of the minimum wage/ living wage has become (been crafted into?) a divisive political issue, making it very difficult for lawmakers to comprehensively address the issue.

    In your author’s opinion, the only way to realistically achieve a living wage would be for the following to occur:

    The federal government must revisit the $7.25 per hour, federally-imposed minimum wage and increase it to establish a living wage “foundation” (Remember, even the lowest living wage—in South Dakota—is $14.85 per hour.);

    Each state must revisit its state-imposed minimum wage to determine whether it is in fact a living wage, and if it is not, increase the minimum wage accordingly; and

    Each state must incorporate a sliding-scale, automatic cost-of-living adjustment (COLA) in its minimum wage to account for the annual rate of inflation, using an inflation gauge that accurately measures the overall increase in the price of goods and services year-to-year.

    Given the current “political football” that is the minimum wage/living wage, this would be a tall order indeed, perhaps an insurmountable one.