Center for Policy Alternatives
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Minimum Wage

The current minimum wage of $5.15 per hour leaves millions of Americans in poverty.
A full-time job should be a bridge out of poverty, an opportunity to make a living through work. But for minimum wage earners—especially those with families—it is not. An individual who works full-time at the current minimum wage earns about $10,700 a year—$5,900 below the 2006 poverty line for a family of three, and $9,300 below the poverty line for a family of four.
The value of the minimum wage has plummeted due to inflation and federal inaction.
The federal minimum wage is not adjusted for inflation, and it has not increased since September 1997. Low-wage workers fall further and further behind each year that the president and Congress neglect the minimum wage. If the minimum wage had kept pace with inflation since 1979, when it was $2.90 per hour, it would now be over $8.10. The real, inflation-adjusted value of the minimum wage in 2006 is at its lowest point in 50 years.1
Only 28 states have a minimum wage greater than $5.15 per hour.
Twenty-eight states (AK, AZ, AR, CA, CO, CT, DE, FL, HI, IL, ME, MD, MA, MI, MN, MO, MT, NV, OH, NJ, NY, NC, OR, PA, RI, VT, WA, WI) and the District of Columbia have a minimum wage greater than the federal as of January 2007, the highest being $7.93 in Washington. West Virginia has a minimum wage higher than the federal, but it only applies to a small segment of workers. Fifteen states (GA, ID, IN, IA, KY, NE, NH, NM, ND, OK, SD, TX, UT, VA, WY) match the federal minimum of $5.15. Kansas has a minimum wage that is lower than the federal, and five (AL, LA, MS, SC, TN) have no state minimum wage at all.
An increased minimum wage would help millions of working families escape poverty.
If the minimum wage were increased from $5.15 to $6.65—just $1.50—it would directly affect the wages of five to ten percent of the workforce, depending on the state.2 The wage of an additional five to ten percent of workers—those who currently earn between $6.65 and $7.65 per hour—would increase because of the “spillover” effect of a rise in the minimum wage.
An increased minimum wage would especially benefit women and people of color.
About 12.6 percent of working women—11 million women—and their families would be directly affected by a one dollar increase in the minimum wage. Similarly, 18.1 percent of African American workers and 14.4 percent of Hispanic workers would directly benefit from such an increase.3
The current minimum wage strains state public assistance programs.
Minimum wage workers and their families must rely on public assistance to survive. They need Medicaid, subsidized housing, childcare programs, and free school lunches. Raising the minimum wage requires employers to shoulder responsibility for the basic needs of their employees, thereby lowering costs for states and taxpayers.
States do not have to sacrifice jobs for an increased minimum wage.
A comprehensive study by the Economic Policy Institute found that the 1996 and 1997 federal minimum wage increases did not result in job losses. Even teen employment—which some argue is the most vulnerable to minimum wage increases—suffered no job losses.4 Increases in the minimum wage do not harm businesses because costs are offset by their benefits: higher employee productivity, lower turnover, decreased absenteeism, and increased worker morale.
Americans strongly support a higher minimum wage.
Eighty-six percent of Americans favor raising the minimum wage from $5.15 to $6.45 per hour, according to a poll by the Pew Research Center.5 In November 2006, voters approved ballot initiatives to increase the minimum wage in six states. In every case, the measure was approved by a substantial margin: 66 to 34 percent in Arizona, 53 to 47 percent in Colorado, 76 to 24 percent in Missouri, 73 to 27 percent in Montana, 69 to 31 percent in Nevada, and 56 to 44 percent in Ohio.

This policy summary relies in large part on information from the Economic Policy Institute.

Endnotes
  1. Based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) computed by the U.S. Bureau of Labor Statistics.
  2. Economic Policy Institute, “Step Up, Not Out: The Case for Raising the Federal Minimum Wage for Workers in Every State,” 2001.
  3. Ibid.
  4. Economic Policy Institute, “The Impact of the 1996-97 Minimum Wage Increase,” 1998.
  5. Pew Research Center for the People and the Press, “Beyond Red and Blue: Republicans Divided About Role of Government—Democrats by Social and Personal Values,” May 10, 2005.
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