President Joe Biden was right when he said on his TV town hall last week that the federal minimum wage, frozen at $7.25 an hour for more than a decade, must increase. But Biden fumbled some of his numbers, and his sloppiness helps prove that there’s nothing magical about his target of a $15 national floor in four years. The key is steady progress toward a living wage for all.
Biden’s words: “For example, if it went — if we gradually increased it — when we indexed it at $7.20, if we kept it indexed by — to inflation, people would be making 20 bucks an hour right now.”
Actually, taking $7.25 in 2009 and indexing it to inflation yields $8.81. And indexing by itself isn’t so magical. If the first minimum wage, 25 cents in 1938, were inflation-adjusted, it would add up to just $4.67 now.
There is no question the wage needs lifting; someone working full-time at a job that pays it ekes out less than $15,000 a year, before taking into account the Earned Income Tax Credit and other incentives. (A tipped worker who isn’t brought up to the minimum as required by law pockets even less.) That’s punishingly little, especially for parents trying to raise a family on a single paycheck.
But how much and how fast? In a handful of states, the round but arbitrary $15 an hour works out to roughly the current median salary; it’s folly to expect that a rapid hike won’t hurt their labor markets. The nonpartisan Congressional Budget Office estimates a hike to $15 nationwide could cost 1.4 million jobs by 2025.
New York City is already at $15; it took eight years to get there, from $7.25 in 2009. The higher wage here is working. But in this sprawling country with radically different local costs of living, an $11 or $12 minimum, which would ensure a full-time hourly earner can get above the federal poverty level of $24,000 for a family of four, is a smarter near-term target.
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