December 03, 2019
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10 years of failing to raise the federal minimum wage

Micky Bedell | BDN
Micky Bedell | BDN
Local business owners back the minimum wage referendum during a press conference in 2016 at Fork and Spoon in Bangor.

The Facebook 10-year challenge has come around again. People who use the social media platform are encouraged to post photographs of themselves from now and 10 years ago. The point is to see how much people, and their lives, change in a decade.

Here’s something that hasn’t changed in 10 years: the federal minimum wage. It was last raised in 2009, to $7.25 an hour.

Twenty-nine states, including Maine, and many large cities mandate a higher minimum wage, so most minimum-wage workers earn more than the federal minimum. Still, wage stagnation is a reality, especially for low-wage workers. Although The Brookings Institution warns that measures of wage growth can be easily manipulated (by using different time periods, different measures of inflation and by looking at different wage sectors), it found some consistent trends between 1979 and 2018: Wage growth was larger for earners at the high end of the wage scale, and men’s earnings fell while those for women rose.

Raising the federal minimum wage won’t solve all these disparities, but it can help.

Maine offers a look at what happens when the minimum wage is significantly increased. Maine voters in 2016 backed a referendum to gradually raise the state’s minimum wage. It is now $11 an hour and will rise to $12 an hour next year. It will be adjusted for inflation after that.

The successful referendum raised Maine’s minimum wage from $7.50 an hour to $9 an hour on Jan. 1, 2017. It was the largest raise in the minimum wage in 15 years.

With a significant rise at the bottom of the wage scale, Maine’s average personal income grew faster than the national average in 2017, the first year of the state’s minimum wage increase. According to statistics released last November by the U.S. Bureau of Economic Analysis, the average personal income of Mainers rose 3.7 percent from 2016 to 2017 to $46,455.

U.S. Department of Labor statistics show that wages grew across the board for Maine workers in 2017. Analysis by the left-leaning Maine Center for Economic Policy found that income growth in Maine in 2017 was concentrated among the lowest-paid workers. Maine’s growth among these households outpaced the nation and New England, highlighting that more than the national economic recovery was a play.

At the same time, overall employment and the average number of hours worked also grew in Maine, dispelling warnings that the minimum wage increase would depress hiring and hours.

Higher wages had a real impact for Maine’s low-income families, especially those headed by single mothers. In 2017, 10,000 fewer Maine children were living in poverty compared to the prior year. Maine’s decline in poverty from 2016 to 2017 was the largest in the country and the state’s child poverty rate in 2017 was the lowest it had been since 2005, according to the Maine Children’s Alliance annual data book KidsCount. The rate was nearly unchanged in 2018.

The alliance credits Maine’s minimum wage increases as one reason for the significant drop in child poverty. Still, the group warned that Maine’s child poverty rate is the second highest in New England, behind Rhode Island, so there is still work to do.

Raising the minimum wage isn’t the only solution to reducing poverty or increasing standards of living, but it certainly helps. For this reason, Maine can serve as one example for why the federal minimum wage should be increased.

 



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