- The federal minimum wage was last raised on July 24, 2009 – 12 years ago.
- As legislators squabble over infrastructure, the minimum wage is still nowhere to be found.
- Democrats do still want to raise it, but the party is split on how and when to do it – and how much.
- See more stories on Insider’s business page.
The federal minimum wage was last raised on July 24, 2009. Back then, “I Gotta Feeling” by the Black Eyed Peas was topping the charts and “Harry Potter and the Half-Blood Prince” sat atop of the box office. Facebook was just starting to eclipse MySpace.
Times have changed. But the federal minimum wage of $US7.25 ($AU10) hasn’t.
In the last 12 years, a real movement to up the minimum to at least $US15 ($AU20) has grown. Fight for 15, a movement led by fast-food workers, began in 2012 – and it hasn’t stopped campaigning. Politicians like Sen. Bernie Sanders signed on to the cause. Polling shows that most Americans want a $US15 ($AU20) minimum wage, and voters across the political spectrum reflected that: In 2020, red state Florida voted for Donald Trump to get another term – and voted a $US15 ($AU20) minimum wage into law.
Yet, progress has stalled. Eight moderate Democrats voted against a $US15 ($AU20) minimum in President Joe Biden’s first stimulus package.
A minimum wage increase has largely fallen off the Democrats’ radar as they prepare to advance as much as $US4 ($AU5) trillion in new economic spending. Progressives including Sanders and Sen. Elizabeth Warren want to revisit it, while other members of their party aren’t sure how to do it.
“I’m just not hearing much talk about it right now,” Sen. Elizabeth Warren of Massachusetts told Insider. “Democrats should tackle the minimum wage again. Too many people are struggling at the bottom end of the wage scale. Right now, all of the attention is around infrastructure.”
Sanders indicated he could make another push later in the year. “My intention is to do everything I can to make that happen,” he told Insider.
But the party is still split about what to do. On the moderate side, Sen. Tom Carper of Delaware, who voted against the $US15 ($AU20) minimum wage, told Insider that tying the minimum wage to changes in the consumer price index and inflation would “be a good approach going forward.” He didn’t specify a number.
Democrats are stuck on the minimum wage
Many states have taken matters into their own hands and raised their own minimums, but 16 are at the federal rate and five default to the federal minimum.
A recent report from the left-leaning Economic Policy Institute finds that the federal minimum wage is worth 21% less than it was in 2009.
Arindrajit Dube, a professor of economics at the University of Massachusetts, Amherst, who has extensively studied the minimum wage and its impact on the economy, told Insider that the stagnant federal minimum – and some states defaulting to that rate – “means that’s there’s still swaths of the country where essentially we don’t have a wage standard.”
“I haven’t seen any dampening of interest in raising the minimum wage by voters at large in any way. I actually absolutely agree that getting employers to compete for workers is critical. I think we also know, so is having a wage standard, a floor,” Dube said.
“The appetite to raise it is very high,” Sen. Tim Kaine of Virginia told Insider, but he said Democrats still disagree on things like how fast it should be raised and whether a tipped wage should be left alone.
Kaine suggested that rising wages in the service sector as well as state moves to increase pay could be dampening urgency. President Joe Biden has said that employers are starting to compete for workers by hiking pay.
What is realistic?
While $US15 ($AU20) is the number progressives and the president have lined up behind, centrist senators think that’s too high. For instance, Sens. Mitt Romney and Kyrsten Sinema said in April that they were working on a bipartisan proposal to raise the minimum wage. They didn’t specify a number, but Sen. Joe Manchin told HuffPost that he thought it was $US11 ($AU15) – a figure that Manchin, a key moderate, has previously signaled support for.
That bill hasn’t materialized so far.
“I think $US12 ($AU16) is better than $US7.25 ($AU10),” Dube said. “And so I think having some kind of a compromise, which for example, Joe Manchin and others can live with, is much, much better than just not doing anything.”
Romney and another Republican, Sen. Tom Cotton, have laid out a separate plan to raise it to $US10 ($AU14) an hour over two years, tied to immigration enforcement. At the time, Republican Sen. Rob Portman told Insider he supported this plan.
Some Democrats appear to be revamping older ideas to attract GOP support. Sen. Ron Wyden, chair of the Senate Finance Committee, told Insider in a statement he still supports a backdoor approach that Democrats scrapped in March.
It included tax credits for small businesses and tax penalties on large firms to incentivize them to raise wages, but experts at the time said it would be very difficult to implement and easily avoidable.
“I’ve continued to work on the carrot from my carrot-and-stick approach,” Wyden said. ‘I want to incentivize the smallest of small businesses – those with middle-class owners – to raise their workers’ wages.”
He went on: “[I] believe including this kind of carrot is key to getting Republicans on board because that’s what we’ve done in the past, and getting 60 votes,” he said.
The amount of things Congress must address is piling up for September, making a federal minimum wage increase very unlikely before then. Lawmakers must pass new spending bills by September 30 or else the federal government shuts down. They also need to either suspend or raise the debt ceiling and deal with the end of stimulus programs like federal unemployment aid.
“Going into the fall and end of the year before the holidays is kind of wide-open,” Zach Moller, director of the economic program at the centrist think-tank Third Way, told Insider. “Before then, we have a lot of things that must be done.”