The first of the year, twenty state raised their minimum wage rates – some by pennies, others by a dollar or more – as part of previously scheduled efforts to adjust for cost-of-living gains or to ratchet up towards goals like a $15-an-hour minimum pay – Kansas wasn’t among them. In fact, Kansas is among the 20 U.S. states that continue to have a minimum wage either equal to or below the federal minimum wage of $7.25 per hour.
As the cost of living has significantly increased year-over-year, the value of the federal minimum wage in real dollars has consistently decreased. I fact, the value of the federal minimum wage peaked in 1968 when it was $1.60, which would be worth about $12 in 2020 dollars.
In Missouri, the minimum wage rose from $7.85 to $8.60 an hour – the first of five annual increase that will take it the state’s minimum wage to $12 and hour by 2023.
Again this year, Kansas legislators have introduced bills to increase Kansas’ minimum wage. Rep. Jim Ward (D-Wichita) filed House Bill 2022, which would raise the minimum wage from $7.25 per hour to $11 in 2020 and then to $15 in 2021. For workers who receive tips and gratuities, the wage would go from $2.14 to $2.63 and then to $3.13 in 2021.
Looking Beyond a
State Increase
If Kansas can’t get a minimum rate bill passed, there may be hope on the federal level. Pres. Joe Biden campaigned on raising the minimum wage to $15 per hour. Finally with Democrats in control of the house, the senate and the oval office, a federal minimum wage increase might actual become law.
The federal government hasn’t raised the minimum wage since 2009.
In addition to Democratic control in Washington, the COVID-19 pandemic may also help garner support for tan increase. Workers’ needs are greater during an economic downturn because, with so many people jobless, they have little bargaining power and employers are able to keep wages low, said Ben Zipperer, an economist at the Economic Policy Institute, a progressive think tank.
Minimum wage workers are typically younger and predominantly have jobs in the leisure and hospitality sector, federal data show. These service-heavy businesses have been rocked throughout the pandemic as public health and safety measures have triggered closures of restaurants, hotels and entertainment venues.
“We have lots of low-wage, service workers who are working through the Covid crisis, many of whom are in jobs with a greater risk of transmission,” said Ken Jacobs, chair of the Center for Labor Research and Education at the University of California-Berkeley. “This will be a very welcome boost for them. As well, a lot of families are struggling right now in this crisis.”
As the pandemic has raged on, housing and food insecurity have risen and incomes have fallen. And it’s been lower-wage workers who have suffered the brunt of the economic fallout.
Business interests push back
At the same time, some legislators and business organizations have called for a pause on scheduled minimum wage hikes, and pushing back on approving others citing the burden on small businesses that are already struggling.
It goes without saying the local neighborhood stores and businesses with razor-thin profits have the greatest potential for being negatively impacted by an increase in minimum wage, while major corporations can more easily absorb the costs. This is especially true during a pandemic which many small businesses are struggling with the economic downturn created by the pandemic.
During his announcement of the “American Rescue Plan,” President-elect Joe Biden pushed for the minimum wage in the United States to be raised to at least $15 an hour.
Biden’s Push to End Poverty
Biden has made increasing the minimum wage a core part of his $1.9 trillion stimulus package. He says raising the minimum wage to $15 an hour would help lift millions of Americans out of poverty. It’s part of his bigger package of extended unemployment insurance, rent relief, food assistance, keeping essential frontline workers on the job, and aid to small businesses
Biden stressed that no person working 40 hours a week should be living “below the poverty line.”
“That’s what it means, if you work for less than $15 an hour and work 40 hours a week, you’re living in poverty,” he said.
During her confirmation hearing and in respond to concerns from Republican lawmakers, Treasury Secretary nominee Janet Yellen said that a $15 minimum wage increase would not have any significant effects on the job market, responding to concerns from Republican lawmakers.
But Yellen said that economic literature has shown that a minimum wage increase will only have minimal effects on job loss, overall benefitting the economy.
“Researchers often look at what happens if one state raises its minimum wage and a neighboring state leaves it alone to see how businesses fare in the two different places with different treatments, and the findings are that job loss is very minimal, if anything,” Yellen said.
Biden’s focus remain on eliminating poverty in America. He believes his economic package will significantly decrease poverty in America.
“That’s 5 million children lifted out of poverty if we move. Our plan will reduce poverty in the Black community by one third, reduce poverty in the Hispanic community by almost 40%, said Biden. “People tell me that’s going to be hard to pay. Florida just passed it, as divided as that state is, they just passed it. The rest of the country is ready to move as well.”
A higher minimum wage has also been discovered to decrease earning discrepancies between Black and white workers, MacGilvary added.
Poverty Costs Governments
The nation’s low minimum wage could be costing the federal government more than $100 billion a year, a UC Berkeley Labor Center study published Thursday finds.
“When their incomes don’t go up but their expenses do, they have to turn to the safety net programs to fill in that gap,” said study co-author Jenifer MacGillvary.
The reliance on safety nets has been exacerbated by the COVID-19 pandemic, MacGillvary added. She said service workers making minimum wage are often those exposed to the highest COVID-19 risk.