Over the past few weeks, Congressional Democrats with support from the White House, having been pushing a bill to gradually raise the federal minimum wage to $10.10/hour from the current $7.25 and index it to the Consumer Price Index. Though most analysts agree that the bill has little chance of passing the Republican-controlled House of Representatives, there has nevertheless been much debate over the consequences of raising the Federal minimum wage- especially among smaller businesses where the increase in employment costs can have the greatest impact.
What is interesting, however, is that there a lot of misconceptions floating around about the Federal minimum wage that, when considered, dramatically change the whole picture.
For starters, here are three facts about the minimum wage that you may not know about:
1. Almost half of the states in the U.S. have their own minimum wage rates that are in many cases significantly higher than the current Federal minimum wage. Nineteen states (plus D.C.) have set their own, higher minimums, ranging from $7.35 in Missouri to $9.19 in Washington State. (Some cities and counties have gone even higher — San Francisco’s minimum wage, for example, is set to rise 19 cents to$10.74 next month.) Those states collectively include 45% of the nation’s working-age (16 and over), meaning the federal demographic data don’t capture a significant share of the nation’s lowest-paid workers.
2. According to the Pew Research Center, when the Federal minimum wage is adjusted for inflation, it actually was the highest in 1968. Minimum wage earners received the equivalent of $8.56 (in 2012 dollars) in 1968. Since the minimum wage was last increased in 2009, to the current $7.25/hour federal minimum has lost about 5.8% of its purchasing power due to inflation.
3. The most common worker to earn minimum wage is… a young, white woman working part-time. According to an earlier report by the Pew Research Center, most of the nation’s minimum wage workers are young: 50.6% are between the ages 16 to 24. They are also mostly white (78%), mostly women (half of the total minimum wage earners are white women), and a total of 64% are part-time workers.
In short, a raise in the Federal minimum wage may not be as dramatic as some critics are claiming since many states already have their own increases in place. It would also make sense given the current rate of inflation. Finally, the groups most affected may not be what most people are picturing. As more people are educated about the realities of minimum wage, it could dramatically change the nature of the debate.