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Trying to Live on the Minimum Wage

Originally meant to protect American workers from being exploited, the Fair Labor Standards Act was enacted in 1938 and set mandatory federal minimum wages at 25 cents per hour.  In the years following, congress and the President acted to raise minimum wage to keep up with inflation and productivity. Around the 1980’s, it became much more difficult to get a labor wage bill out of congress and the term “living wage” circulates to replace the widely criticized minimum wage.  Many protesters and researchers find that the minimum wage does not reflect the actual cost of living and no longer keeps pace with the country’s economic growth. Labor Economist Mark Price of the Keystone Research Center in Harrisburg shares his statistical findings and suggestions for improvement.

While President Obama supports raising minimum wage, getting any sort of bill out of the divided congress has been extremely difficult.  The main piece of legislation, the “Fair Wage Act” has been introduced in both 2012 and 2013, but has never had enough support to pass.  As a result, many cities are introducing Living Wage Ordinances hat mandate higher wages than minimum wage for people working for the city. Pittsburgh has a Living Wage Ordinance.

Critics of raising the minimum wage say that if someone is working for minimum wage at somewhere such as McDonald’s, they can simply switch careers to find a higher paying job. Price and his research find that this is not always the case.

“The reality for many workers is that they tend to get trapped in low wage jobs. “ When wages are low, innovation and motivation is also low.  Price finds that higher wages encourages innovation and competition and boosts the overall economy.

“When technological innovation happens, incomes should grow across the board, not just at the top,” he states, “ if it doesn’t reflect that, more and more people will be pushed into poverty over time.” 

Many of Price’s findings are optimistic.  Before the last minimum wage raise in 2009, Pennsylvania had already voted to increase their own state minimum wage. Workers and legislation are aiming to increase the hourly pay to anywhere between $9.80 to $15.

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