Historically, the minimum wage has been a contentious issue. When it was first introduced and passed by President Franklin Roosevelt in 1933, it was deemed unconstitutional. The buying power of the federal minimum wage peaked in 1968, over 50 years ago, at $11.91 adjusted for inflation. Since then, the relative value of the minimum wage has decreased repeatedly, or at best remained at 1950s levels.
But what hasn’t stopped increasing? The productivity of our workforce. If the minimum wage had kept pace with productivity, it would now be around $24 an hour. When it was created, the minimum wage was to ensure a livable wage for all Americans working a full workweek. Unfortunately, the federal minimum wage today would not keep any worker with a family above the federal poverty line, even in the cheapest city in the US. Most people would agree that as the entire economy grows, the wages and salaries of all involved should grow as well. Sadly, this has not been the case over the past four decades.
Wage growth has stalled as a result of our weakening of labor laws, crackdowns on unions and lack of federal action, and it’s remained stagnant in the face of rising costs of living. While much more besides raising the minimum wage can and should be done to benefit the working class, it is an essential first step.
One argument against a minimum wage increase is that different locations have vastly different living costs. This argument simply means that individual states must take action to care for their citizens. . At the moment, Indiana’s minimum wage mirrors that of the federal government at $7.25 an hour, while Illinois, Michigan and Ohio have all raised their minimum wages above $9.00 an hour. The living wage for a single adult with no children in Indiana is $13.44 an hour, nearly twice as high as what’s required by law. And just to be clear, a living wage is what it would take to be able to pay only for one’s basic needs like housing, food and healthcare. To afford even a two-bedroom apartment at a fair rent would require a $16.57 minimum wage. Once again, this does not take things like dependents into account, something many working people have.
Increasing the pay of average Hoosiers would allow them to pay more for clothes, food, housing and many other goods and services, putting the money they’ve earned back into the economy and allowing it to circulate. It would even reduce government expenses as more people are lifted off of welfare and other social programs. Our caucus is working to make progress on this issue. Senator Eddie Melton has proposed a bill that would immediately raise the Indiana minimum wage to $12 an hour, and then increase $1 a year until 2026, a needed step for our state.
While some people may point to small businesses as their reason for opposing a minimum wage increase, it’s important to note that 67% of small business owners are in favor of an increase, believing that it would spark sales and demand, and help them to retain employees or even hire new ones. This belief is supported by a report that studied cities where the minimum wage was increased—no statistically significant decrease in employment was found.
Above all other reasons for increasing the minimum wage, one of the main reasons is that it is what the people want. Raising the minimum wage is a popular policy supported by a majority of Americans, across party lines.
Over 25% of Hoosiers work for less than $15 an hour. Our caucus believes all jobs and workers deserve respect and dignity, regardless of age. No Indiana citizen working 40 hours a week should be forced to choose between rent and food or medicine and childcare because they do not make enough to cover all their basic needs. A minimum wage increase would be a meaningful step in building a better life for every hardworking Hoosier that works a full-time job, and our caucus will be fighting to get it done.