Raising minimum wage among Obama proposals in SOTU

Thursday, February 14th, 2013 By

State of the Union

Among the State of the Union proposals was one for raising minimum wage rates. Image from Wikimedia Commons.

For those who haven’t heard, the president gave a State of the Union address recently and made a number of proposals for a number of things. Among other proposals was the idea of raising the minimum wage, or rather Federal minimum wage, to $9 per hour by 2015.

State of the Union included many proposals, raising minimum wage among them

The other night, President Obama took to the podium on the floor of the House of Representatives to give the annual State of the Union address, where the occupant of the White House gives an update to Congress on where things are at and tosses out some ideas as to how they can be better.

It’s a big deal for some reason these days. Thomas Jefferson sent letters. Wouldn’t it be nice if that were still the case? Better stuff might be on television.

At any rate, a bunch of proposals were made during the address about what to do about various ills. Granted, most of the proposals were unfathomably vague, except for one. Namely, according to NBC News, raising minimum wage workers to $9 per hour by 2015.

A moderate bump

It sounds like a big raise, but in reality, it wouldn’t affect as many workers as one might think. For starters, that would only be raising minimum wage at the federal level. Not every state pays federal minimum wage.

Currently, according to the Atlantic, five states have no minimum wage laws, those being Alabama, Louisiana, Tennessee, South Carolina and Mississippi. Granted, those states also have some of the highest poverty rates in the nation.

A further 18 states, according to USA Today, and Washington, D.C., have minimum wage in excess of the federal rate, currently $7.25 per hour. Washington state is the highest, at $9.19 per hour.

The president also proposed pegging the minimum wage to inflation. Currently, federal minimum wage is whatever rate Congress sets it at. The last minimum wage increase passed in 2006, according to NBC News. Inflation adjustments are automatic already in 10 states, according to USA Today. Also, according to the Bureau of Labor Statistics, 38 states have tipped minimum wage exemptions, where employers can pay less than minimum wage if employees, such as bartenders, waiters, etc., receive tips.

Federal tipped minimum wage, as the Atlantic points out, is $2.13 per hour.

Would be a benefit

There would be a benefit to raising minimum wage rates to $9 per hour, as it would raise the annual earnings for a full-time minimum wage worker from $14,050 to $18,720. Granted, that’s still not much of a payday. However, any increase helps. The Federal Reserve Board of Chicago observed in a study that every $1 per hour the minimum wage increases, a worker gets an extra $2,800 in spending power.

Technically, the federal minimum wage has regressed since 1968, when it was $10.51 per hour, adjusted for inflation. Minimum wages have lost 30 percent of their purchasing power since then, according to CNN. A raise to $9 per hour would restore minimum wage to the same purchasing power it had in 1981.

Sources

NBC News

Atlantic

USA Today

Bureau of Labor Statistics: http://www.dol.gov/whd/state/tipped.htm

CNN: http://money.cnn.com/2013/02/12/news/economy/obama-minimum-wage/

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