America has now gone longer without an increase in the federal minimum wage than at any point in the law’s eight-decade history.
Kevin Hassett, chairman of the White House Council of Economic Advisers, said he and President Trump have not discussed the administration’s position on raising the federal minimum wage. Trump has backed a number of positions on the minimum wage, saying at one point during the 2016 presidential campaign that he supported significantly increasing it and at others that he would not lift it.
Twenty-nine states have passed state minimum wages that are higher than the federal baseline, while in the other 21 the federal minimum prevails. Republican-controlled states are less likely to have passed minimum wage hikes, although voters in conservative-led states such as Arkansas have approved higher minimum wages through ballot initiatives.
“We’ve had Congress upon Congress that can’t get it done, so we’re stuck with this shameful number,” said Judy Conti, government affairs director for the National Employment Law Project, which advocates a higher federal minimum wage.
Experts say the recent strong run of U.S. economic growth over the past several years bolsters the case for raising the minimum wage, given that businesses are better positioned to survive the rise in costs than they are during a downturn. Wages have begun rising for U.S. workers as low unemployment improves their bargaining power, but some economists argue they would increase even faster with minimum wage hikes.
The “effective” minimum wage — the average wage being paid to all minimum wage workers — has surged to $12 an hour, largely due to state and local governments’ hikes, according to a report in the New York Times by an economist who served in the Treasury Department under President Barack Obama. But about 700,000 minimum-wage workers, in areas that have not passed state or local increases, are still paid $7.25 an hour, the report said.
The value of that wage has fallen by about 17 percent over the past decade, according to the Economic Policy Institute, a left-leaning think tank, which translates into a $3,000 loss in annual earnings for a full-time year-round minimum-wage worker.
“Business profits have been steadily growing, and it’s much easier to absorb what businesses view as negative economic shocks when the overall context is positive and good,” said Steven Kyle, an economist at Cornell University. “That’s been true for the last five years.”
Hassett, of the president’s economic team, pointed to recent wage growth at the bottom of the income distribution and argued the Republican tax law had helped bolster pay for low-income workers. In November 2018, White House National Economic Council Director Larry Kudlow called the federal minimum wage a “terrible idea” and “silly,” arguing it hurts small businesses by increasing their costs.
“The best way to increase wages is to encourage capital formation, increase productivity, and drive the equilibrium wage higher," Hassett said.
Democrats in Congress have faced internal divisions over how high to raise the minimum wage, with the party’s liberals and much of the 2020 presidential field pushing for a $15 an hour minimum wage. Moderate Democrats in Congress have pushed small increases in the federal minimum wage that would vary by region.
Polling suggests raising the minimum wage is popular, and some large companies have begun shifting their positions. Amazon chief executive Jeff Bezos, after raising the company’s wage floor to $15 an hour amid criticism from lawmakers, has challenged competitors to follow suit. (Bezos owns The Washington Post.) And in March, McDonald’s announced it would not longer use its resources to push against minimum-wage hikes at the federal, state or local level.
“There is not a single community in the U.S. where someone can have a decent quality of life at the current federal minimum wage,” said David Cooper, an EPI researcher on the minimum wage. “Congress has never waited this long to lift up the wages of workers at the bottom.”