The U.S. Minimum Wage Level is Outrageous 

BY RICK BAUM

 APRIL 12, 2024
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Photo by Ehimetalor Akhere Unuabona

In 2007, towards the end of the Bush regime, amendments to legislation were passed that raised the minimum wage from $5.85/hour in the middle of 2007 to $7.25/hour in July 2009 where, as of today, it remains unchanged.  Many states require employers to pay a higher minimum wage. However, as of January 1, 2024, some 13 states, including workers’ paradise Texas and swing states Pennsylvania and Wisconsin, continue to adhere to the federal minimum wage level.  Seven other states have no minimum wage, or one that is lower than $7.25/hour.

A worker paid the federal minimum wage who works full-time all 52 weeks in a year for 40 hours a week earns $15,080/year.

In 2010, the first full year of the $7.25/hour minimum wage, the government classified a single person under 65 as living in poverty if one’s income was less than $11,344. Then, a full-time worker at the minimum wage earned $3,736 above the poverty threshold.

As of 2023, the poverty threshold for a single person under 65 is $15,852.  A full-time federal minimum wage worker in 2023 would have earned $772 less than the poverty threshold and, despite working full-time, be counted as living in poverty.

In 2023, the single federal minimum wage worker earning $15,080 is subject to social security and Medicare taxes that together come to 7.65% of one’s income, $1,154, and would also be assessed federal income taxes of $124. This worker would derive a “benefit” of $196 from the earned income credit which can be seen as a government subsidy for businesses that pay their workers low wages, reducing total federal taxes to $1,082.[i]

The worker’s federal tax situation results in take home pay in 2023 of $13,998 for a net income of $6.73/hour or less than $270/week to pay for necessities that include “luxuries” such as food, housing, utilities, transportation, clothing, and medical care.

Condemning a full-time worker to an income level that results in one being classified as living in poverty is happening at a time when corporations and those with vast holdings are accumulating outlandish amounts of wealth. A recent article in the  New York Times  informs us that “Corporate leaders have enjoyed record profits on his [self-described “labor guy” Biden’s] watch…,” and the Federal Reserve Board is reporting that the nominal wealth of the U.S. wealthiest 1% increased from $16.43 trillion as of the end of 2009 to $44.57 trillion as of the end of 2023, an increase of over 270% during which time the federal minimum wage went from $7.25/hour to $7.25/hour for an increase of 0%.[ii]

According to the Department of Labor, “The Fair Labor Standards Act (FLSA) establishes [the] minimum wage…” Given the gross economic inequality and poverty level wages for some in the U.S., would calling the Fair Labor Standards Act the Unfair Labor Standards Act be more appropriate?

What can be done to raise the minimum wage? Obviously, workers in the United States and their organizations should be better organized and demand that the minimum wage be raised to a level that provides all workers with a decent standard of living. They could also insist that the salary of all members of Congress and the President be equivalent to the minimum wage on which they would be required to support themselves.

Notes.

[i] In 2019, before the pandemic, this same federal minimum wage worker would be subject to an income tax of $289 and only receive an earned income credit of $38. Compared to2019, in 2023, due to lower income taxes and a higher earned income credit, this minimum wage worker is a recipient of an extra $323.  However, this “windfall” is an amount that does not cover the increase in the cost of living during this four-year period.

[ii] From the end of 2009 to the end of 2023, according to the Federal Reserve Board, the nominal wealth of the U.S. wealthiest .1% (one-tenth of one percent) went from $6.15 trillion to $19.97 trillion, more than tripling. It is more than five times the wealth of the poorest 50% of the U.S. population which is $3.66 trillion.

Rick Baum teaches Political Science at City College of San Francisco. He is a member of AFT 2121.

Last Year, You Spent More Than a Month’s Rent on Pentagon Contractors

BY LINDSAY KOSHGARIAN

 APRIL 12, 2024
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Photograph Source: Alex Layzell – CC BY-SA 2.0

Ever wonder where your taxes go? Each year, the Institute for Policy Studies releases a tax receipt so you can find out.

One item always stands out: the Pentagon — and the contractors who profit off it.

In 2023, the average taxpayer spent $2,974 on the Pentagon. Of that, just $705 went to salaries for the troops, who often have to rely on programs like food stamps. A much larger sum — $1,748 — went to corporate Pentagon contractors. That’s more than the average American’s monthly rent, $1,372.

From Lockheed Martin (the top federal contractor and longtime weapons maker) to SpaceX (which Elon Musk runs when he’s not spewing racist and anti-semitic tropes), these corporations don’t need your support. And they aren’t operating with your well-being in mind.

Enriching them comes at the cost of better health care, education, clean air and water, disaster management, and more. Here are just five examples from the average tax bill.

1. Pentagon contractors ($1,759) vs. the Child Tax Credit ($110).

In 2024, the Pentagon budget is set to increase by $27 billion, bringing the department’s budget to about $825 billion. About half of that will go to for-profit contractors.

Meanwhile, an expansion of the Child Tax Credit during the pandemic succeeded in cutting the child poverty rate almost in half— progress that was almost immediately reversed when the expansion expired in late 2021.

Lifting kids out of poverty can have lifelong effects on their health, education, and employment. Isn’t that worth more than a tiny fraction of our spending on military contracts?

2. Lockheed Martin ($249) vs. renewable energy ($11). 

Lockheed Martin is perhaps best-known as the maker of the always over-budget, never-quite-ready F-35 jet fighter, which has spontaneously caught fire three separate times. Despite claims that programs like this are job creators, Lockheed recently made moves to cut jobs.

Meanwhile, despite the necessity of addressing climate change and reducing our reliance on fossil fuels, the average taxpayer’s contribution to renewable energy programs tops out at just $11. 

3. Boeing ($87) vs. the Federal Aviation Administration ($23).

From commercial flights that crashed to others that fell apart in midair, Boeing’s commercial safety record lately has been abysmal. Yet the company is also among the top five Pentagon contractors. Among other military aircraft, it’s the maker of the V-22 Osprey that crashed and killed eight service members in November.

The FAA, of course, is the understaffed, underfunded government regulator responsible for the safety of commercial flights.Maybe we should spend more on regulating companies like Boeing than subsidizing them?

4. Federal prisons ($32.29) vs. substance use and mental health programs ($31.69).

With about 2 million people incarcerated nationally, about one in three Americans will have an immediate family member who has been in prison or jail. Your federal income tax dollars support this system, which often treats substance use and mental health challenges as issues best confined to a prison cell.

By contrast, help for substance use disorder or mental health issues can still be profoundly hard to get, as any affected person or family member will tell you. What if we spent more on treating these health conditions than punishing them?

5. Foreign militaries ($112) vs. wildfire management ($14).

From Afghanistan and Iraq to Ukraine and now Gaza, it feels like the U.S. is always either starting a war, fighting a war, or subsidizing a war. These wars are increasingly unpopular — and they’re not making us any safer.

Meanwhile, a growing number of Americans have experienced the direct or indirect effects of wildfire in recent years. These disasters cost upward of $394 billion each year. Isn’t that threat worth addressing?

Pentagon contractors want us to think we need what they’re selling, but wrong-headed priorities like these mean we’re actually worse off. Spread the word: every taxpayer deserves better.

Lindsay Koshgarian directs the National Priorities Project at the Institute for Policy Studies. She’s the lead author of the new report State of Insecurity: The Cost of Militarization Since 9/11.