The growing income inequality has become a major issue in the United States in recent years. Much of this debate has surrounded by the failure of the minimum wage to keep up with the ever-growing cost of living.
There have been many studies done by numerous think tanks that show if we raise the minimum wage to $10.10 an hour it will lift millions of low-wage workers out of poverty. While the opponents of a minimum wage increase like to say that many of the low-wage workers are just teenagers earning extra spending money, the truth could not be farther from the truth.
“Most people who would get a raise if we raise the minimum wage are not teenagers on their first job – their average age is 35. A majority of lower-wage jobs are held by women. These Americans are working full-time, often supporting families, and if the minimum wage had kept pace with our economy’s productivity, they’d already be earning well over $10 an hour today. Instead, it’s stuck at $7.25. Every time Congress refuses to raise it, it loses value because the cost of living goes higher, minimum wage stays the same.”
- President Obama, Remarks at Central Connecticut State University, March 5, 2014
The wage gap between men and women has also come to the forefront of the low-wage discussion with recent political pushes for legislation like paycheck fairness and the Lily Ledbetter Act.
The fact is that women are the majority of low-wage workers, over 55%, of the people who would be effected by a minimum wage increase. This is even more evident when we talk about the tipped minimum wage. Women make up 75% of workers in tipped occupations.
Many states have a reduced minimum wage for tipped workers. For example the tipped minimum wage in New Hampshire is $3.27 an hour. This means the employer, the restaurant, only has to pay employees $3.27 an hour provided the employee makes enough in tips to ensure that they are paid the state minimum wage ($7.25). 19 states have a tipped minimum wage of $2.13 an hour, while six states do not have any reduced minimum for tipped workers.
The truth is that workers in predominantly tipped occupations are twice as likely as other workers to experience poverty, and servers are almost three times as likely to be in poverty. It is glaringly obvious that workers who rely on tips are not making enough to support themselves or their families.
Just like the minimum wage, the power of the tipped wage has eroded over the last 20 years since it was last increased. Since 1991, the tipped minimum wage has declined by 40 percent in real terms. Today, the tipped minimum wage equals just 29 percent of the full minimum wage, the lowest share since the tipped minimum wage was established in 1966.
Another major issue with the tipped minimum wage is that not all employees are making enough in tips to reach the minimum wage. When surveyed, more than 1 in 10 workers in predominantly tipped occupations report hourly wages below the full national minimum wage, including tips.
Raising the full minimum wage and the tipped minimum wage will help reduce poverty among women and their families, as well as make progress toward closing the gender pay gap.
- About one-quarter (26 percent) of all workers who would benefit from increasing the minimum wage to $10.10 have dependent children, and 31 percent of female workers who would benefit have children.
- 2.8 million working single parents would benefit from the President’s proposed increase in the full minimum wage, more than 80 percent of whom are women.
- Research shows that raising the minimum wage reduces child poverty among female-headed households.
- Increasing the minimum wage can also help women work their way out of poverty and into the middle class.
- For every dollar that men earn, women earn just 77 cents. Estimates from the President’s Council of Economic Advisers suggest that increasing the minimum wage to $10.10 an hour and indexing it to inflation could close about 5 percent of the gender wage gap.
Chances are that you know someone who works hard in a low-wage job who will benefit from an increase in the minimum wage. Raising the minimum wage will help workers lift themselves out of poverty and reduce the amount of money they receive from government assistance programs. Raising the minimum wage is common sense. America needs a long overdue raise, and the time is now.
Read the full White House report: THE IMPACT OF RAISING THE MINIMUM WAGE ON WOMEN – March 2014