The left-leaning Economic Policy Institute analyzed Obama-backed legislation to increase the federal minimum wage. The result: Raising minimum wage would provide a “modest economic boost” while giving workers more reasonable salaries.
An earlier EPI analysis of the Fair Minimum Wage Act proposes a raise to the federal minimum wage by three incremental increases of $.95, so that the minimum hourly wage paid to workers would eventually be $10.10 instead of $7.25, where it currently stands. It would then adjust to inflation automatically in the years to come.
The new legislation would also raise the minimum wage for servers and other tip workers, who have received $2.13 an hour since 1991. In six years time it would reach 70 percent of the regular minimum wage.
Since that analysis, five states have raised their minimum wage: California, Connecticut, New Jersey, New York, and Rhode Island. Ohio also plans to raise its hourly minimum wage.
“A lot of states and even a lot of municipalities have all boosted their minimum wages out of a recognition that the federal minimum wage is just too low,” David Cooper, an economic analyst with EPI and the author of the report, told The Huffington Post. “Because Congressional action is so hard to come by these days, they’re not going to wait.”
The EPI update indicates that 27.8 million workers would be the beneficiaries of higher wages, taking home roughly $35 billion more than they do today. That money would then be spent and added to the economy. The EPI projects an increase of $22 billion to the U.S. economy, and the creation of 85,000 jobs.
It’s clear that minimum wage has not kept up with inflation, so a dollar — or $7.25 — doesn’t buy as much as it did a few years ago. The EPI reported that as it stands now, the minimum wage does not provide enough to keep a family of two above the poverty line. There has been no significant increase in federal minimum wage in four years.
After Obama announced his support for the Fair Minimum Wage Act, introduced by Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.), U.S. Labor Secretary Thomas E. Perez Tweeted: “Here's the bottom line. No one who works a full time job should have to live in poverty.”