Back when I was in law school, one of my professors (who had clerked for one of the Justices of the Supreme Court) gave us all a hint about how the Supreme Court decides major cases… “they put their fingers on the pulse of the nation and then decide accordingly”. They do not go too far ahead of where we are culturally or economically. I believe the same principle works in in congress and, for the purposes of this post, the issue of the minimum wage.
Currently, the federal minimum wage is $7.25 but congress is facing relentless pressure to increase it to $10.10. According to Jeremy Quittner, “Somewhere between 40 percent and 60 percent of business owners favor increasing the minimum wage, according to various surveys… [however many] small business groups such as the National Federation of Independent Business and the U.S. Chamber of Commerce are vocal opponents…”. As a result of their lobbying efforts, a recent “bill to raise the minimum wage to $10.10 failed in the Senate.”
However, though these small business groups were successful with Congress, just look at the recent trends from around the country:
1. The president issued an executive order in March 2014 that raised the minimum wage for federal contractors to $10.10;
2. According to the National Conference of State Legislatures:
a. During the 2014 legislative session, 34 states debated whether or not they should increase the state minimum wage;
b. 11 States increased their minimum wage
c. “As of August 1, 2014, 23 states and D.C. have minimum wages above the federal minimum wage.”
3. And as Quittner discussed in today’s featured article, TaskRabbit, a freelancer service with over 30,000 independent contractors decided in July to enact an $11.20 minimum wage floor for all of its freelancers.
a. However, despite this wage floor, company spokeswoman Jamie Viggiano is “careful to note that the company doesn't ever set the price for jobs--both the contractor and the contracting party negotiate that through the network. So the new wage floor falls squarely on the contracting party.”
If you look at the trends, however, you can see the successful efforts to increase the minimum wage flowing from the executive, to the states and now to the private sector. But is it enough to overcome the barrier that is congress? Well, it all turns on the strength of the economy. Per Quittner, in February 2014 the Congressional Budget Office estimated that raising the minimum wage will have the following effect on the economy:
- $10.10 “might cost approximately 500,000 jobs, or 0.3 percent of the workforce by 2016…[b]ut it would lift nearly 1 million workers out of poverty.”
- “An increase to $9…might cost the economy 100,000 jobs.”
If, however, the economy continues to improve and the question of “inequality” and the “wage gap” becomes a big issue in the upcoming presidential election, I bet congress will put its finger on the pulse that is trending in the nation and increase the minimum wage.
