The Minimum Wage Debate

The Minimum Wage Debate

By Kaye Foley

Last week, Los Angeles became the largest city to set a minimum wage at $15 in the past year, following in the footsteps of Seattle and San Francisco. The increase won’t go into effect until 2020, but it’s another win for minimum wage grassroots campaigns and advocates.

The debate over whether to raise minimum wages has raged for years. At $7.25, the federal minimum wage has not been raised since 2009, and has not kept up with inflation.

The minimum wage was first established in 1938, when President Franklin D. Roosevelt signed the Fair Labor Standards Act (FLSA) as part of the New Deal. The minimum wage was set at $0.25. In a fireside chat, Roosevelt referred to the FLSA as “the most far-reaching, farsighted program for the benefit of workers.”

Since that time, the minimum wage has been raised 22 times. In 1968, at $1.60 —almost $11 in today’s dollars — the minimum wage was at its peak purchasing power. It doesn’t automatically go up with inflation, so Congress and the president must agree on when an increase is needed. But Congress and the country are divided over the issue.

Many Democrats and labor unions have advocated for raising the minimum wage, believing it would pull people out of poverty, reduce income inequality and give workers more spending money, which would help boost the economy.

But on the other side of the debate, many Republicans and business owners warn that the cost to companies would lead to layoffs and reduced hours for workers.

There’s another theory out there that Warren Buffet supports — expanding the earned income tax credit. But that’s a hard sell, because while it would put more money in the pockets of low-income workers, lawmakers can’t agree on where that money would come from.

The debate has kept the push for raising America’s wages at a standstill in Washington. So states, cities and a handful of companies, like Gap and Wal-Mart, decided to forge ahead on their own and raise their own minimum wages.

As this continues to play out across the country, when it comes to minimum wage, at least after watching this video you’ll be able to say, “Now I get it.”