Commentary: Minimum wage is on the ballot this year. The proposals may not be enough.
10/30/2024 16:10
Kamala Harris said she wants to increase the federal minimum wage to at least $15 an hour, and three other states have measures on the ballot to up their state minimum wages to $15 or more. But inflation has made that amount inadequate.
Raising the minimum wage is up for a vote in this election year.
Not only has Democratic presidential nominee Kamala Harris said she wants to increase the federal minimum wage to at least $15 an hour, but also three other states have put measures on their ballots to raise their state minimum wages to $15 or more.
While the proposals would financially boost Americans who make the least among us and who are disproportionately female workers, $15 is no longer enough to meet a person's basic needs, even in the most affordable places in the U.S.
"The cost of living has continued to rise," Dr. Amy Glasmeier, a professor of economic geography and regional planning at MIT, told me earlier this year. Glasmeier developed the Living Wage Calculator, which shows how much a worker needs to make to cover basic living costs based on their family status.
"The living wage today is much closer to the $21 to $23 level than $15," Glasmeier said.
In August, the Harris-Walz campaign vowed to increase the federal minimum wage when it proposed to exclude tips from federal income taxes. Last week, the vice president reiterated that stance and said she supports a hike to "at least $15 an hour," in an interview with NBC, noting that the measure would have to go through Congress.
Former president Donald Trump, the Republican presidential candidate, has not weighed in on whether the federal minimum wage should be raised.
The federal minimum wage is $7.25 per hour. It has not been lifted since 2009, or for 15 years, the longest stretch without increases. Full-time workers making the federal minimum earn just $15,000 a year, “which is essentially poverty wages,” Harris said last week at a campaign stop.
"On average, [the minimum wage] still only covers 54% of the cost of living for a family of four with two adults," Glasmeier told me.
President Joe Biden attempted to increase the wage to $15 per hour when he came into office. The proposal was part of his massive pandemic relief bill, the American Rescue Plan, but the provision didn't make it to the final bill passed by Congress.
Instead, Biden enacted a $15 minimum wage for federal workers and contractors through executive order, saying the effort represented "a down payment" on his campaign pledge, one that Harris has picked up.
States have had far more success raising their minimum wages.
Thirty states and the District of Columbia have a minimum wage higher than the federal minimum wage, according to the Economic Policy Institute. In the remaining states, the federal minimum wage applies.
"They have a specific geography, predominantly in the Midwest or in the South," Glasmeier said about the states that have stuck with the federal minimum wage. "And the reason is because once the industrial base collapsed in the Midwest, it dropped very rapidly to a place that was going to be low wage because all the high-wage jobs disappeared."
Still, she noted, "even in low-income places like Mississippi, $7.25 would have to be boosted by 67% in order to cover the cost of somebody living [there]."
Voters in Alaska, California, and Missouri will consider upping their state minimum wages even more when they go to the polls next week.
In Alaska, there's a ballot measure to increase the minimum to $13 per hour starting July of next year. Further increases would phase in until 2027 when the wage would be set at $15 an hour and adjusted for inflation every year after that. Currently, the state's minimum wage is $11.73 per hour, which is adjusted for inflation annually.
Missouri voters will consider whether the state minimum wage should increase to $13.75 beginning next year followed by an increase to $15 in January 2026. The wage would be inflation-adjusted every year after that. Right now, the state's minimum wage is $12.30, adjusted annually for inflation.
And in California, voters will decide whether to raise the minimum wage to $18 per hour for employers with at least 26 employees and to $17 per hour for those with fewer employees, starting in 2025. Both would increase annually for inflation. The state's minimum wage is currently $16 per hour.
The state proposals are a step in the right direction, but none of them — if implemented — would cover the main living necessities for a single person with no children, according to Glasmeier's calculator. Add any children, and the minimum wage needs to be even higher.
To provide a livable wage for an adult with no children, Alaska would need a minimum wage of $23.26; Missouri, $20.20; and California, $27.32. If that person has one child she's supporting on her own, that jumps to $41.52 in Alaska, $34.25 in Missouri, and $47.96 in California.
The $15 goal gained traction in November 2012, when 200 fast-food workers in New York City protested for that hourly wage and a union, igniting the Fight for $15 movement.
But that was 12 years ago. Now $21.86 is the equivalent of $15 back then, per a government inflation calculator, which is roughly the minimum to provide a living wage, according to Glasmeier.
"$15 an hour actually has not been a living wage probably for five or six years," Glasmeier said.
"The real living wage today is probably at least $5 to $7 more."
Janna Herron is a Senior Columnist at Yahoo Finance. Follow her on X @JannaHerron.
Read the latest financial and business news from Yahoo Finance