Monday, May 20, 2013

Mahmud: Minimum Wage

Minimum Wage
Raunak Mahmud
March 29, 2013

Cambridge Dictionary defines minimum wage as “the smallest amount of money that an employer is legally allowed to pay someone who works for them.”[1] The lower minimum wage in the U.S. is a serious problem that affects hundreds of thousands Americans every day. Most of the American has experience to work at low-paying job in certain period of life. The federal minimum wage law established in 1938, and increased every few years to offset inflation. From 1997 to July 24, 2007 the federal minimum wage was constant at $5.15. The current federal minimum wage is $7.25 an hour which is still lower wage. Many states have their individual minimum wage. The minimum wage has some exceptions under certain circumstances. Workers with disabilities, full-time students, workers below age 20, tipped workers, and student learners are on that case. They have a different minimum wage rate [2]. The federal wage law is administered by the Department of Labor’s Wage and Hour Division.

The history of minimum wage in the U.S. is more than 70 years old. There was no federal minimum wage before the Great Depression of 1930s, and no legislation to protect workers from exploitation on that time. As a result tens of thousands of workers were regularly exploited in different sectors, and forced to work for pennies a week. In 1938, President Franklin D. Roosevelt signed the Fair Labor Standards Act (FLSA) into law. The FLSA introduced a mandatory federal minimum wage of 25 cents an hour. From that time, Congress revised federal minimum wage every few years to account for inflation, and the ever rising cost of living [3].
There was a steady increase in minimum wage overtime. The basic minimum wage increased four times until it reached $1 per hour in 1956. Then it took 18 years to reach at $2 per hour (1974). From 1974 to 1981, there was a steady increase in minimum wage and reached at $3.35 an hour [4]. Then the amount was constant at $3.35 till 1989. By 1997, it increased to $5.15 per hour, and remained the same for 9 years as of 2006. The period 1997-2007, is the longest period in history during which the minimum wage has not been adjusted. There were three $0.70 increments in the raise in minimum wage from 2007 to 2009. It was $5.85 per hour in 207, $6.55 in mid 2008, and finally, $7.25 in the mid of 2009 [5]. This is the present federal minimum wage, although some states adopted their own minimum wage rate that is higher than the federal rate.
The minimum wage working poor in U.S. are living below the official poverty line. U.S. Census Bureau defines minimum wage working poor as a family which has a cash income of less than $15,067 a year for a family of three and $19,307 for a family of four [6]. In 2004, the number of people living on extremely poverty was 15.6 million. It was the highest peak since 1975 [7]. According to a report, in October 2008 more than 28 percent of American families were living in poverty, 9.6 million households described as low income family. In 2006, more than 19 million jobs were paid below the official poverty level ($9.91 an hour) in USA. It was an increase of 5 million poverty wage job from 2002. There was a rapid increase in family income inequality between the year 2002 and 2006. In 2009, 19 million people lived on minimum wage earning families [8].
In 2009, 72.6 million workers aged 16 or above were paid at hourly rates. That represents 58.3% of all wage and salary workers. In 2009, young people were more likely to be minimum wage workers. Among the hourly paid teenagers, about 19% was the minimum wage workers [9], where about 3% were aged group of 25 or above [10]. The percentage of minimum wage workers did not differ much considering the race/ethnicity. Hourly paid white, black, and Hispanic workers who earned minimum wage or less had a percentage of about 5% [11]. Women percentages were more likely higher than the men percentage in 2009. Hourly paid women earned the federal minimum wage had a percentage of 4%, compared with about 4% of men [12]. Considering the major occupational group, the highest proportion of workers earned at or below the minimum wage was employed in service occupations, about 13%. About 6 in 10 workers earned at or below the minimum wage in 2009 were employed in service occupations, mostly in food preparation and serving related jobs [13].
Recent minimum wage raises are very little and late as well. Minimum wage working poor are still having problem in many aspects of life. Minimum wage workers barely have health insurance. The family health insurance costs more than the total annual minimum wage. Comparing the cost of living in 1956 and today, workers income is lower than that time. The 1956 minimum wage is worth $7.93 in today’s dollars. Minimum wage does not provide a minimally adequate living standard. Setting it too low means it does opposite of what the Fair Labor Standards Act intended by reinforcing detrimental labor conditions and people are continually juggling which necessities to go without. Will it be heat or eat, rent or healthcare? In current minimum wage more people living in homeless shelters and cars. Setting minimum wage too low means more working people are turning to overwhelmed food banks. According to 2008 Mayors Hunger and Homelessness Survey emergency food assistance requested by 42% of the employed workers, as were 19% of the homeless. It is immoral that workers earning minimum wage, who care for children, the ill and the elderly, struggle to care for themselves and their families.
Today, minimum wage is a poverty wage instead of anti-poverty wage. According to the Bureau of Labor Statistics data “The wage floor has dropped below the poverty level; millions of workers find themselves in paychecks above the minimum, but not above the poverty line. Most of the workers in low wage jobs have little or no benefits at all. More children of working poor are growing up in poverty” [14].
I interviewed Mahmudul Hasan, a 49 years old man who was a minimum wage worker in 1990. He lived in efficiency by himself and paid his home rent and bills. He earned $3.80 an hour and worked 40 hours a week. He made approximately $760 a month. With this low income it is very for him to survive. He sold his car as a result of high insurance cost and gas. He said he disconnected the home internet connection that time, because this extra bill was a burden for
him [15]. Due to downturn of the present economy, many Americans are now and will continue to be struggling with this poor situation. They are getting low wages as well as potential economic exploitation, bad working conditions.
Considering the current economic condition and the standard of living, I think the federal minimum wage should be raised to $10 an hour. The minimum wage would take a $9.92 value today to match the buying power of minimum wage in 1968 [16]. It is immoral that the minimum wage is worth less now than it was in 1968. So, a raise in minimum wage at $10 in 2013 will bring it closer to the value it had in 1968, when the national unemployment rate was 3.6%. Raising the minimum wage will boost the business and economy. By raising the minimum wage go to the people who necessarily need money to spend for food, housing, healthcare, fuel and other necessities. Minimum wage workers recycle the increased raises into the local businesses and the economy by buying needed goods and services. Raising minimum wage will decrease the government spending on social welfare programs. It will motivate and encourage employees to work harder [17].

1 “Definition,” Cambridge Dictionary Press, Last Modified 2013.

2 “What is the minimum wage,” United States of Department of Labor, Last Modified March 19th, 2013.

3 Burkhauser, Richard , and T. Finegan. JSTORE Database, "The Minimum Wage and the Poor: The End of a Relationship." Last modified 2013. Accessed April 23, 2013. 

4 Ralph, Smith, and Bruce Vavrichek, “The Minimum Wage,” Bureau of Labor Statistics, Accessed 20th March, 2013.

5 “Minimum Wage History” Oregon State University, Last Modified 2012.

6 “Poverty in America,” United States Conference of Catholic Bishops, Last Modified 2013.

7 “Current Population of Survey, 2009,” U.S. Census Bureau, Last Accessed March 20th 2013

8 “Current Population of Survey, 2009,” U.S. Census Bureau, Last Accessed March 20th 2013

9 “Characteristics of Minimum Wage Workers,” United States Department of Labor, Last Modified 2010.

10 “Characteristics of Minimum Wage Workers,” United States Department of Labor, Last Modified 2010.

11 “Characteristics of Minimum Wage Workers,” United States Department of Labor, Last Modified 2010.

12 “Characteristics of Minimum Wage Workers,” United States Department of Labor, Last Modified 2010.

13 Sklar Holly “Living Wage Campaign” the Minimum Wage to $10 in 2010 July 22 2009.pdf Last Modified 2009.
14 “Characteristics of Minimum Wage Workers,” United States Department of Labor, Last Modified 2010.

15 Interview with Mahmudul Hasan by Author.

16 “Characteristics of Minimum Wage Workers,” United States Department of Labor, Last Modified 2010.

17 "Living Wage Campaign" Last Modified 2011.

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