2020 has been terrible for people working in the service sector and other low-wage jobs due to the effects of the pandemic. Thanks to various measures that have been passed in states and cities because of pressure by activists and labor unions, minimum wages are due to rise in some areas of the country providing at least some relief.
2020 was a devastating year for underpaid frontline workers.
But even in the face of public health and economic crises triggered by Covid-19, the Fight for $15 movement persisted, and now 24 states and 50 municipalities throughout the U.S. are set to raise minimum wages in 2021.
On New Year’s Day, 20 states and 32 cities will increase their minimum wage, with the wage floor in 27 of those jurisdictions reaching or exceeding $15 per hour. The January 1 raises will be followed by another round of wage floor hikes later in 2021, when four additional states and 18 localities will increase their minimum wage, 13 of them to at least $15 per hour.
But this is still not enough. As Jen Sorensen points out in this cartoon from 2014, if minimum wages had risen according to productivity gains, they should have reached $17/hour by 2014 and to $24 per hour by today, as argued by economist Dean Baker.
Until 1968, the minimum wage not only kept pace with inflation, it rose in step with productivity growth. The logic is straightforward; we expect that wages in general will rise in step with productivity growth. For workers at the bottom to share in the overall improvement in society’s living standards, the minimum wage should also rise with productivity.
While the national minimum wage did rise roughly in step with productivity growth from its inception in 1938 until 1968, in the more than five decades since then, it has not even kept pace with inflation. However, if the minimum wage did rise in step with productivity growth since 1968 it would be over $24 an hour today.
This raises a final point: we can’t imagine that we can just raise the minimum wage to $24 an hour without serious disruptions to the economy, many of which would have bad effects (i.e., unemployment) for those at the bottom. While there is certainly room to raise the minimum wage, and many states have done so with no measureable impact on employment, there clearly is a limit to how far and how fast we can go.
It is quite reasonable to have a target where the minimum wage returns to where it would be, if it had tracked productivity growth over the last 50 years. But we will have to reverse many of the institutional changes that have been put in place over this period to get there. This is where the sort of policies described in Rigged (it’s free) come in, but that is a much longer story.
Of course, the idea that the people at the bottom of the income scale should get a boost is anathema to our wealthy ruling classes. Senate majority leader Mitch McConnell had the nerve to oppose the raising of the stimulus payments from $600 to $2,000 by saying that it constitutes ‘socialism for rich people’ when in fact the full amount only goes to people earning $75,000 or less and gets phased out to zero by the time their income reaches $90,000, whereas McConnell and all the other millionaires in Congress have no problem doling out massive tax breaks to the obscenely wealthy. It is curious how people who earn less than $90,000 are considered rich while those earning hundreds of thousands of dollars and more are deserving of help.
Bernie Sanders explains what socialism for the rich really looks that McConnell has had no difficulty supporting.