A tale of two minimum wages

Summary

The video script delves into the complexities of minimum wage in the United States, highlighting the disparity between the federal minimum wage of $7.25 and the higher rates set by some states and cities, like Seattle's $15 per hour. It discusses the economic debate surrounding wage increases, with proponents arguing they benefit low-income workers and opponents fearing job losses. A study by the Economic Policy Institute is mentioned, showing that wage hikes in certain areas have positively impacted low-wage earners, particularly women and people of color. The script also touches on the historical value of minimum wage, noting its decrease in real terms due to inflation, and the growing divide between areas with static and indexed minimum wages.

Takeaways

• 😕 Minimum wage jobs are difficult, with workers knowing they cannot be paid less by law.
• 💵 The U.S. has a complex system of minimum wages, including a federal wage and higher state/local wages.
• 📉 The federal minimum wage is $7.25 and has not been raised since 2009.
• 🏙️ Some cities and states, like Seattle and New York City, have raised their minimum wage to as high as $15 an hour.
• 🌍 About 39% of Americans live in areas where the federal minimum wage is the floor, while 61% live in places with higher minimum wages.
• 📈 Minimum wage increases are controversial, with proponents arguing it boosts wages for low-income workers and opponents fearing job loss.
• 🔬 A recent study found that between 2013 and 2017, places with minimum wage increases saw low wages rise by 5%, especially benefiting women and people of color.
• 📊 In states that did not raise their minimum wage, wage increases were less than half of the 5% seen in states that did.
• 📉 Due to inflation, the federal minimum wage of $7.25 is worth less than it was 60 years ago when adjusted for inflation.
• ⏳ While some states have indexed their minimum wage to inflation, the federal minimum wage requires proactive action from Congress to be raised.

Q & A

What is the current federal minimum wage in the United States?

The current federal minimum wage in the United States is $7.25 per hour, which has been in place since 2009.

Which city has the highest minimum wage in the country?

Seattle has one of the highest minimum wages in the country, with a rate of $15 per hour.

What is the minimum wage in New York City?

New York City's minimum wage is up to $15 per hour.

What is the minimum wage in New Hampshire?

In New Hampshire, the minimum wage is as low as $7.25 per hour as of 2017.

What percentage of the U.S. population lives in a place where the federal minimum wage is the standard?

39 percent of the country lives in a place where the federal minimum wage is the standard.

How much has the minimum wage increased in states that have raised it between 2013 and 2017?

In states that have raised the minimum wage between 2013 and 2017, low-wage workers saw an increase of 5%.

How has the minimum wage increase affected women in the bottom 10th percentile of workers?

The minimum wage increase boosted the wages of women in the bottom 10th percentile of workers by 5 percent in states that raised the wage.

What is the impact of inflation on the purchasing power of the minimum wage?

Due to inflation, the minimum wage gets weaker every year it isn't raised. The $7.25 from 2009 is only worth 86 cents now.

How does the federal minimum wage get increased?

The federal minimum wage is increased by Congress passing a law and the President signing it.

What is the alternative method to increase the minimum wage automatically?

An alternative method is to index the minimum wage to inflation, automatically increasing it to match inflation.

How many states and Washington DC are planning on indexing their minimum wages to inflation?

18 states and Washington DC have or are planning on indexing their minimum wages to inflation.

Outlines

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💼 The Challenges of Minimum Wage Jobs

Working for minimum wage is tough, as employees deal with hard work and the knowledge that their employers are legally restricted from paying them less. The federal minimum wage in the U.S. has been $7.25 since 2009, but many states and cities have raised their wages above this. In places like Seattle and New York City, the minimum wage is as high as $15 an hour, while states like New Hampshire still adhere to the federal minimum of $7.25. In 2017, about 39% of the U.S. population lived in areas with just the federal minimum wage, while 61% lived in places with higher wage levels.

⚖️ The Debate over Raising the Minimum Wage

The debate around raising the minimum wage is long-standing. Advocates argue that raising wages will help low-income workers earn more money, while opponents claim it could reduce employment and ultimately harm workers. The discussion remains polarized, with strong arguments on both sides.

📊 Real Impact of Minimum Wage Increases

A study by the Economic Policy Institute (EPI) showed that between 2013 and 2017, areas that raised the minimum wage saw a 5% increase in wages for the lowest-paid workers. In contrast, states that didn’t raise their wages saw much smaller increases. The same study highlighted that women and people of color, who are disproportionately represented in low-wage jobs, benefited more from these increases.

💵 Inflation’s Erosion of the Minimum Wage

The federal minimum wage has been stuck at $7.25 for over a decade, which means its value decreases over time due to inflation. A dollar from 2009 is now only worth 86 cents, diminishing the buying power of minimum-wage workers. When adjusted for inflation, today’s minimum wage is actually worth less than it was 60 years ago.

📈 Indexing the Minimum Wage to Inflation

Raising the federal minimum wage requires Congressional action, but an alternative solution is to tie wage increases to inflation automatically, similar to how Social Security works. Some states have already adopted this approach. Currently, 18 states and Washington D.C. have implemented or are planning to implement inflation indexing for their minimum wage, further widening the gap between states with higher and lower wage standards.

Keywords

💡Minimum Wage

Minimum wage refers to the lowest amount an employer is legally allowed to pay a worker. In the video, it highlights the U.S. federal minimum wage, set at $7.25 since 2009, as well as the higher minimum wages imposed by some states and cities. The video explores the complexities and inequalities between different regions, and how this wage has not kept up with inflation.

💡Federal Minimum Wage

The federal minimum wage is the base wage set by the U.S. government, which currently stands at $7.25 an hour. This has been the standard since 2009, and the video discusses the stagnation of this rate over time despite inflation. The difference between federal and local wages creates a divide in worker earnings across the country.

💡State and Local Minimum Wage

Many states and cities have enacted their own higher minimum wages than the federal standard. The video points out examples like Seattle and New York City where wages are as high as $15 an hour. This disparity highlights the growing divide between areas that adjust wages based on local costs of living versus those that stick to the federal rate.

💡Inflation

Inflation refers to the general increase in prices and the corresponding decrease in the purchasing power of money. In the video, inflation is discussed in relation to the minimum wage, which loses value every year it remains unchanged, meaning that the $7.25 wage today buys significantly less than it did in 2009.

💡Economic Policy Institute Study

This study is referenced in the video to highlight how states that raised the minimum wage between 2013 and 2017 saw wage increases for the lowest earners by around 5%. This data serves to counter arguments that raising the minimum wage negatively impacts employment, showing that such increases help improve earnings for low-wage workers.

💡Women and People of Color

The video notes that women and people of color are disproportionately represented in low-wage jobs, making them more affected by changes in the minimum wage. The Economic Policy Institute study shows that minimum wage increases benefited women in the bottom 10th percentile of workers, highlighting how wage policies intersect with issues of gender and racial inequality.

💡Indexing to Inflation

Indexing the minimum wage to inflation means automatically adjusting wages in line with rising prices, ensuring the wage retains its value over time. The video explains that 18 states and Washington, D.C., have adopted or plan to adopt this system, ensuring workers' wages do not stagnate as they do with the federal minimum.

💡Wage Floor

The wage floor refers to the minimum legal wage that can be paid to workers, essentially acting as a baseline for earnings. In the video, the federal minimum wage is described as a wage floor that 39% of the U.S. population relies on, while the remaining 61% live in areas with higher wage floors.

💡Employment Effects

The video briefly touches on the debate surrounding the employment effects of raising the minimum wage. Critics argue that increasing wages could lead to lower employment, as businesses may reduce hiring or cut hours to offset higher labor costs. The video mentions these arguments but focuses more on the positive wage effects shown by recent studies.

💡Congress and Policy Change

The role of Congress in raising the federal minimum wage is emphasized in the video, where it is noted that any federal wage increase requires a proactive law passed by Congress and signed by the President. This political gridlock has contributed to the wage's stagnation, with failed attempts during the Obama administration to raise the wage.

Highlights

Working for minimum wage is challenging due to the hard work and the knowledge that pay cannot legally go below a certain level.

There is no single minimum wage in the U.S.; it varies by states, cities, and counties.

The federal minimum wage has been $7.25 since 2009.

Some places like Seattle and New York City have a minimum wage of $15 an hour, the highest in the country.

In contrast, states like New Hampshire have a minimum wage as low as $7.25 an hour.

39% of the U.S. population lives where the federal minimum wage is the standard, while 61% live in areas with a higher minimum wage.

The divide between areas with different minimum wages is growing.

The minimum wage is a controversial economic topic with arguments on both sides regarding its impact on workers and employment.

A study by the Economic Policy Institute found that minimum wage increases in certain areas boosted low wages by 5% from 2013 to 2017.

In states without minimum wage increases, the wage increase was less than half of that in states with increases.

The wage increase benefited women in the bottom 10th percentile of workers by 5 percent, compared to less than 1% in states without increases.

Women and people of color are disproportionately represented in low-wage jobs, making minimum wage increases particularly significant for these groups.

The federal minimum wage does not automatically increase with inflation, leading to a decrease in its value over time.

The minimum wage has lost value compared to its worth in the 1960s when adjusted for inflation.

To raise the minimum wage, Congress must pass a law, which the president then signs.

Automatically increasing the minimum wage to match inflation, like Social Security, has been adopted by some cities and states.

Currently, 18 states and Washington DC have or are planning on indexing their minimum wages to inflation.

Transcripts

working for the minimum wage isn't fun

the work is hard and then you also have

to work with the knowledge that your

boss is literally prevented by law from

paying you less money even if they

wanted to but there isn't just one

minimum wage there's actually a whole

tangled mess of them throughout the

country yes you have the National long

that's 725 and it's been that since 2009

but across the country states and cities

and counties have chosen to raise their

minimum wage higher than the national

one so in places like Seattle and 2090

New York City the minimum wage is up to

$15 an hour

that's the highest but then you go to

New Hampshire you can make as little as

725 an hour as of 2017 39 percent of the

country lives in a place where the

federal minimum wage was the floor the

other 61% live in places where it's

raised higher the divide between those

two worlds is growing larger and larger

and we know that the minimum wage is and

will probably always be one of the most

controversial topics in economics on one

side you have people saying it needs to

be raised because if you raise it it'll

help lower-income workers make more

money then you have opponents saying

that raising the minimum wage will

actually lead to lower employment and

then the end workers will make less

money you've heard these arguments

before so let's look into it

how have minimum wage increases actually

affected those making the lowest wages a

recent study came out by the Economic

Policy Institute that found that between

2013 and 2017 places that have seen

minimum wage increases saw low in wages

boosted by 5% in states that haven't

raised the minimum wage the increase was

less than half of that the same study

also showed that the increased boosted

the wages of women in the bottom 10th

percentile of workers by 5 percent

that's compared to less than the 1% in

states that hadn't raised the wage that

makes sense considering that women are

disproportionately represented in

low-wage jobs that's also true for

people of color it's not just the

increased wages themselves that matter

it's also how those increases are coming

to be right now the federal minimum wage

number is fit

it's been stuck at 7:25 for about a

decade and because inflation exists the

minimum wage actually gets weaker and

weaker every year that it isn't raised

so that 2009 dollar is only worth 86

cents now here's a chart of the actual

dollar amount of the minimum wage since

its beginning in the 30s now here's a

chart for the inflation adjusted a

number we could see that right now when

you account for inflation the minimum

wage is actually worth less than it was

60 years ago so to actually raise the

minimum wage Congress has to proactively

pass a law and the president has to sign

it

and while minimum wage increases are

broadly popular politically recently

that hasn't been the case

President Obama spent his entire term

trying in vain to raise the minimum wage

to no avail the alternate is to treat

the minimum wage like Social Security

and automatically increase it to match

inflation and over the last decade a

number of cities and states have decided

to do just that right now 18 states in

Washington DC have or are planning on

indexing their minimum wages to

inflation so with each passing year the

39 percent and the 61 percent grow

further and further apart