As Congress heads back into session, one of the first orders of business should be to raise the minimum wage. Raising the minimum wage strengthens workers' purchasing power and, in turn, provides a boost to the overall economy. Raising the minimum wage would also help close the racial wealth gap, which is at historic levels.
The current federal minimum is lower in real value than in 1956. Contrary to many conservative claims, roughly half of all minimum wage workers are adults. At this wage level, people working full-time cannot afford to feed their families. A full-time minimum wage worker makes $15,080, $4,000 below the federal poverty line for a family of three.
Increasing the minimum wage is important not only for economic stability for families, but also for the overall economy. The minimum wage is so low that a full-time worker cannot afford to feed her family and must rely on programs, such as the Supplemental Nutrition Assistance Program (SNAP), to make ends meet. Raising the minimum wage so families are economically more self-sufficient would reduce government spending, saving billions of dollars over just 10 years.
Low-wage workers are also more likely to immediately spend any additional earnings on basic needs and services that they previously could not afford. In turn, demand for local businesses and services rises, strengthening local economies and offsetting any cost increase for businesses. A recent report from the Economic Policy Institute found that increasing the minimum wage to $10.10 by 2015 would result in a $32.6 billion net increase in economic activity over the phase-in period and generate approximately 140,000 new jobs.
Raising the minimum wage is also necessary to close the racial wealth gap. One of the biggest drivers of the racial wealth gap is household income. People of color are overrepresented among low-wage workers. While they made up only 32 percent of the workforce, they represented 42 percent of low-wage workers in 2013. Increasing the minimum wage would particularly benefit workers of color by raising their household income and helping workers of color reach parity with their white counterparts.
The Fair Minimum Wage Act would increase the minimum wage to $10.10, index the wage to inflation and raise the tipped minimum wage for the first time in 21 years. An increase to $10.10 would raise the wages of roughly 30 million people and bring nearly 6 million people out of poverty, including 3.5 million people of color. In addition, raising the minimum wage would likely raise the wages of those that earn just above the minimum wage. This last point is particularly important given that wages have stagnated for every education level and for workers at nearly every income level.
Finally, raising the minimum wage enjoys remarkably strong public support. Recent polls have found that 73 percent of people support raising the minimum wage to $10 an hour and 78 percent believe the minimum wage should be high enough so that no family with a full-time worker falls below the poverty line.
This Congress has a chance to take a simple step to help working families across the nation. Raising the minimum wage helps families reach economic security, provides a boost to the overall economy, and enjoys wide popular support. It's a legislative no-brainer.
Cha, J.D., Ph.D., is an associate director at PolicyLink and an adjunct professor at Fordham Law School. She is a participant of The OpEd Project Global Policy Solutions Greenhouse.