The U.S. Minimum Wage Level is Outrageous
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.
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