Issue Paper: Minimum Wage

 

MINIMUM WAGE

While the AFL-CIO is proud to have supported the 2006 increase of the state minimum wage to $7.10 per hour on March 1, 2006, and to $7.40 per hour on January 1, 2007, it is still not high enough.  Throughout the 60’s and 70’s, minimum wage earnings by a full time worker lifted a family above the poverty line.  Today, even with the recent increase, a full time minimum wage worker still struggles to cover basic expenses such as rent, food, transportation and health care.

Since the Rhode Island minimum wage is not adjusted for inflation, the only way to prevent erosion of its value is to pass another increase.  To achieve progress in our welfare reform efforts, it is critical to have a minimum wage that clearly states a person should not live in poverty if they work.  

A study by the Economic Policy Institute, found:

  • Adults make up the largest share of workers who would benefit from a minimum wage increase: 79% of workers whose wages would be raised by a minimum wage increase are adults (age 20 or older).
  • An estimated 1,229,000 single parents with children under 18 would benefit from a minimum wage increase. Single parents would benefit disproportionately from an increase---single parents are 10% of workers affected by an increase, but they make up only 7% of the overall workforce. Approximately 6.4 million children under 18 would benefit as their parents’ wages were increased.
  • The earnings of minimum wage workers are crucial to their families’ well being. Evidence from an analysis of the 1996-97 minimum wage increase shows that the average minimum wage worker brings home more than half (54%) of his or her family’s weekly earnings.
  • Over half (53%) of workers who would benefit from a minimum wage increase work full time and another third (31%) work between 20 and 34 hours per week.
  • Applying four rigorous economic tests, there was a failure to find any systematic or significant job loss due to raising the minimum wage.  

Our neighboring states, Connecticut and Massachusetts, both have a higher minimum wage rate than Rhode Island.  Connecticut’s minimum wage is currently $8.00 per hour and will be increased to $8.25 on January 1, 2010.  Massachusetts minimum wage is currently $8.00 per hour.

In summary, the overall effects of federal and Rhode Island minimum wage increases have been positive, substantial numbers of low paid workers received significant wage hikes, and the benefits flowed principally to working families that needed them the most.

AFL-CIO POSITION

The Rhode Island AFL-CIO supports raising the minimum wage to assist wage workers to stay even with inflation.  Currently, Rhode Island’s minimum wage stands at $7.40 per hour. The Rhode Island AFL-CIO supports increasing the minimum wage to $7.75 per hour on July 1, 2010.  Effective July 1, 2011, we would support a cost of living index tied to inflation.