Wages and Consumer Spending are Stagnating as the Federal Minimum Wage Marks Nine Years Without a Raise

CONTACT: Erin Musgrave, erin@emcstrategies.com, 530-864-7014

July 23, 2018—July 24 will mark nine years since the federal minimum wage was last increased. Since reaching $7.25 an hour in 2009, the federal minimum wage has lost nearly 15 percent of its buying power. Full-time minimum wage workers make just $15,080 a year. Twenty-one states have minimum wages at or below the federal minimum and various other states have minimum wages that are above $7.25 an hour, but still inadequate. Business owners across the country are calling for the minimum wage to be raised to benefit businesses and the economy.

Consumer spending is stagnating—in the first quarter of the year, the U.S. Commerce Department said consumer spending rose a scant 1 percent, the lowest in five years—and real wages are not rising despite low unemployment. A new report from the Bureau of Labor Statistics shows average real hourly earnings are actually lower than they were a year ago. Business owners are speaking out in support of raising the minimum wage to boost the consumer spending that makes up about 70 percent of the economy. 

“Businesses rely on consumer spending and consumer spending depends heavily on wages. The minimum wage sets the floor under worker pay – millions of workers have paychecks above the inadequate minimum wage, but still too low to make ends meet,” said Holly Sklar, CEO of Business for a Fair Minimum Wage. “Since the federal government has failed to act, more states have raised their minimum wages, but others will not. The federal government’s abdication of responsibility to raise the minimum wage is weakening consumer demand, straining the safety net, and hurting the economy.” 

In 21 states, the $7.25 federal minimum wage serves as the wage floor. Alabama, Louisiana, Mississippi, South Carolina and Tennessee have no state minimum wage. Georgia and Wyoming have a $5.15 minimum wage. State minimum wages in Idaho, Indiana, Iowa, Kansas, Kentucky, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, Texas, Utah, Virginia and Wisconsin equal the federal rate. The federal minimum wage prevails in states without a minimum wage or with a lower minimum. 

The national floor under workers’ wages was much stronger 50 years ago when the federal minimum wage peaked in buying power. The 1968 minimum wage was worth $11.79 in today’s dollars, according to the Bureau of Labor Statistics Inflation Calculator.

Washington’s current $11.50 minimum wage is the highest among the states (Washington D.C. is now $13.25) while California and Massachusetts are currently at $11. The state of Washington will reach $13.50 in 2020 and Arizona, Colorado and Maine will reach $12 in 2020 as a result of ballot measures passed in 2016. California, Massachusetts, New York and Washington, D.C. are phasing in $15 minimum wages. Thirty-four states have a current minimum wage less than or equal to $9.00, which amounts to $18,720 a year for full-time workers.

The following business leaders and others around the country are available for interviews:

Gina Schaefer, Owner of A Few Cool Hardware Stores, a group of 12 Ace Hardware stores in Washington D.C., Maryland and Virginia“When the minimum wage rises, it puts money in the pockets of those who most need to spend it, from paying the rent to buying more groceries to picking up lightbulbs, tools and paint from the local hardware store. A higher minimum wage means more money circulating in the economy. It’s a virtuous cycle: Our employees shop at other businesses and their employees shop at ours.”

John Traynor, Owner of Harrisburg Midtown Arts Center and The Kitchen & Gallery Bar, Harrisburg, PA: “The current $7.25 minimum wage is a drag on the nation’s customer base, tax base and economy. When the minimum wage is too low for workers to make ends meet, it hurts businesses as well as workers. Raising the minimum wage is one of the strongest tools we have in revitalizing our economy and building thriving communities.” 

Camille Moran, Owner of 4 Seasons Christmas Tree and Plant Farm, Natchitoches, La: “$7.25 is a terrible minimum wage whether you work long hours outdoors or behind the counter or as a health care aide. Our lowest paid employees already earn at least $12.50 an hour. Raising the minimum wage would provide a stronger, more level playing field for growing our economy.”

Rebecca Hamilton, Family Owner and Vice President of W.S. Badger Company, which was named a Forbes Small Giant in 2017, Gilsum, NH: “$7.25 per hour is not an adequate wage in New Hampshire, or anywhere we sell Badger Balm and our other products across the U.S. Paying a living wage is a core part of our culture and has helped us retain excellent staff even in a time when other businesses have struggled. Fair pay and other family-friendly practices help build successful businesses and healthy communities.” 

Lloyd Smith, President and CEO of Cortech Solutions Inc., Wilmington, NC: “We know from experience that employees earning a living wage value their job and it shows in their work. They are able to give far more of themselves to doing it well compared to those who are working a second job or preoccupied with how they will afford housing, healthcare and other basic expenses.”

Angela O’Byrne, President of Perez APC, New Orleans, and Louisiana’s 2016 Small Business Person of the Year: “The minimum wage has been stagnant for too long. Miring full-time workers in poverty makes absolutely no sense. Paying fair wages boosts consumer spending, which drives job creation and forges stronger businesses and communities.”

Kathy Eckhouse, Owner of La Quercia, an award-winning producer of cured meats, Norwalk, IA: “Businesses flourish when their employees can do well and are committed to the work they do. Raising the minimum wage is important to a healthy food system that sustains everyone from producers and sellers to customers and the communities we live in.”

Michael O’Connor, Owner of La Barberia, in Jenkintown and Philadelphia, PA: “We know that by paying fair wages, our employees are happier, and they stick around, providing the great service that keeps our customers coming back and recommending us to others. When the minimum wage goes up, businesses will see costly turnover go down.”

For specific state rates, visit the Economic Policy Institute Minimum Wage Tracker at www.epi.org/minimum-wage-tracker

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Business for a Fair Minimum Wage is a national network of business owners and executives and business organizations that believe a fair minimum wage makes good business sense. www.businessforafairminimumwage.org

 

 

 

 

 

 

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