The growing gap between what people of color earn and the rising cost of living is causing some states to move ahead of the increase in the federal minimum wage proposed by President Obama. But the push-back against any minimum wage increase is drawing big money from a variety of conservative business groups, including Koch Industries.
In his State of the Union address, President Obama urged Congress to raise the federal minimum wage to $9.00 from $7.25 in stages through 2015 and indexing it to inflation. The economic inequality among ethnic groups has grown rapidly, and the lagging minimum wage is in large part to blame, according some economists. The $1.75 per hour increase would stimulate economic growth in the short run, because it would put more money into the hands of households with a greater inclination to spend it, according to a new Chicago Federal Reserve Bank report.
Even though low-wage jobs are an increasingly share of the economy, compensation has fallen more rapidly in the last three years than for better paid jobs – 5 percent or more in five of the top ten low-wage jobs, including cooks, food preparation workers, home health aides, and housekeepers, according to a July 9 report by the National Employment Law Project (NELP).
Had the federal minimum wage kept pace with inflation since the late 1960s, it would actually be closer to $10.50 today. This has prompted some states to address the growing income gap on their own, with10 states increasing minimum wages on January 1 alone. New York State increased the minimum wage to $9 per hour, starting with an increase to $8 December 3, increasing to $8.75 the next year, and then $9 the following year. Other states with higher minimum wages include: Washington - $9.19; Oregon - $8.95; Vermont - $8.60; Nevada - $8.25; Massachusetts - $8.00; Illinois - $8.25; Connecticut - $8.25; and California - $8.00.
But around the country, high-profile companies and conservative lobby groups are pushing back against these wage increases.
The Washington DC-based Employment Policies Institute – funded by the restaurant industry – launched a half million-dollar ad campaign July 10 against raising New Jersey's minimum wage to $8.25 an hour with, increases tied to the Consumer Price Index.
Walmart - the largest private U.S. retailer - is threatening to scrap three planned stores if Washington, D.C. passes a "living wage" bill requiring all major employers pay a minimum of $12.50 an hour. In a Washington Post editorial, Walmart's general manager issued an ultimatum to D.C. Mayor Vincent Gray to veto the bill or Walmart will halt construction on stores. The living wage bill did pass the D.C. City Council 8-5 and the Mayor has 10 days to either sign or veto it. Walmart used the same tactics seven years ago in Chicago after that city passed a similar law, pressuring the mayor to veto the bill.
A Congressional report found that low-income workers of a single Walmart store use roughly a million dollars in public benefits every year to survive, including "safety net" programs like Medicaid, food stamps, free or reduced school lunches, and housing assistance. But Stephen Moore, a senior Wall Street Journal economics writer, argued on MSNBC on July 10 that Wal-Mart actually helps low income workers by offering such low prices that a wage of $8.50 per hour is better than no job at all, noting that "Wal-Mart has raised living standards of poor people by making everything from toothpaste to diapers to cell phones much more affordable to them."
That sentiment reflects a $200,000 media campaign launched July 10 in Wichita, Kansas, by the Charles Koch Foundation to completely abolish the minimum wage, claiming that Americans who earn $34,000 a year should count themselves as lucky. In a July 9 interview with the Wichita Eagle, Koch said "we need to analyze all these additional policies, these subsidies, this cronyism, this avalanche of regulations, all these things that are creating a culture of dependency."
Meanwhile, in a February 2013 report, NELP shows that since January 2011, legislators from 31 states have introduced 105 bills meant to repeal or weaken minimum wage standards - 67 of those bills were sponsored by politicians affiliated with the American Legislative Exchange Council (ALEC).