Minimum Wage Gaps Growing

New Orleans      There are twenty-one states where workers are still frozen at something equivalent to the federal minimum wage at $7.25.  Those states are disproportionately better “red than fed” in the South and West with a smattering in the Midwest and even the Northeast.

I’m not saying there are any surprises here, but the line-up is a rogues list of woe for workers:  In the South, count Alabama, Georgia, Kentucky, North and South Carolina, Louisiana, Mississippi, Texas, and Virginia for nine of the twenty-two.  In the West, we have Idaho, Oklahoma, Nevada, North Dakota, Utah, and Wyoming adding another six.  The Midwest is sadly also very well represented with Indiana, Iowa, Kansas, and Wisconsin for their four while the East adds two with Pennsylvania and New Hampshire.  The gap between these twenty-one states, along with several others that are hovering right near them like Missouri, Montana, New Mexico, and even Illinois, is widening the inequality gap not only between the rich and the rest of us, but even between low-and-moderate income families and their counterparts in other states.

Even with a Democratic governor, it’s not an easy road.  In Louisiana, John Bel Edwards has been turned back by the Republican-dominated legislature three times that he has tried to raise the state minimum wage.  It’s gotten so bad that a state constitutional amendment that would raise the minimum wage to $9 per hour, if approved by the voters, has even picked up support from the New Orleans Times-Picayune.  There were recent efforts to allow cities to set their own rates apart from the state level by vacating a law passed after an ACORN and Local 100 effort won an increase twenty years ago at the ballot box.

These issues were  highlighted in an analysis in the New York Times that talked about the effective rate across the country is now wildly different than the federal standard as other, very populated states, like New York and California, along with major cities like Seattle have raised their wages.

Averaging across all of these federal, state and local minimum wage laws, the effective minimum wage in the United States — the average minimum wage binding each hour of minimum wage work — will be $11.80 an hour in 2019. Adjusted for inflation, this is probably the highest minimum wage in American history.  In 21 states where the minimum wage is still frozen, workers have lost 16% of their buying power.

Furthermore, as their analysis also indicated the main business boogeyman held up as the rationale for keeping wages abysmally low has also continued to erode:

a huge study released in April analyzed 138 different state-level minimum wage increases since 1979. The authors found largely no net negative employment effects, though they did find some in sectors exposed to international trade. And University of Washington economists revised an initial study of Seattle’s recent minimum wage increase that had showed significant negative effects on earnings for some workers. The new study found that the downsides were more muted.

Wrap your mind around this inequity.  If the “effective” national rate is $11.80 per hour now, then workers in these twenty-one states at $7.25 are almost hopelessly underpaid.  A national worker at fulltime hours would be making $24,544 annually, while workers in the left-behind states would make $15,080 fulltime, which is $9464 per year or almost 63% less that the theoretical national worker.  Of course, left-behind state workers actually are farther behind, because the national effective rate was an average after the rest of us pulled the really higher paid hourly workers down closer to our level, making their premium look and spend even more.  Furthermore, since the rate has changed, minimum wage workers are losing purchasing power even as others are gaining.

This kind of inequity at the bottom is as unjust as the gap between all workers now in America and the rich, and should be the easiest part of the inequality gap to eliminate, especially if Congress would act for everyone rather than mainly the rich as well.


Rising Inequality in the New Gilded Age for Some People

New Orleans   A new report from the Economic Policy Institute leaves little room for doubt:  inequality is rising faster than a hit record on the Billboard top-40 charts!

The executive summary is crystal clear:

Income inequality has risen in every state since the 1970s and, in most states, it has grown in the post–Great Recession era. From 2009 to 2015, the incomes of the top 1 percent grew faster than the incomes of the bottom 99 percent in 43 states and the District of Columbia. The top 1 percent captured half or more of all income growth in nine states. In 2015, a family in the top 1 percent nationally received, on average, 26.3 times as much income as a family in the bottom 99 percent.

Rising inequality is not just a story of those on Wall Street, in Hollywood, or in the Silicon Valley reaping outsized rewards. Measured by the ratio of top 1 percent to bottom 99 percent income in 2015, eight states plus the District of Columbia, 45 metropolitan areas, and 139 counties had gaps wider than the national gap. In fact, unequal income growth since the 1970s has pushed the top 1 percent’s share of all income above 23.9 percent (the 1928 national peak share, according to Piketty and Saez) in five states, 30 metro areas, and 78 counties.

Dig a little deeper and run your fingers through their charts and regionally the gap is growing fastest in the West and, small comfort, slowest in the South, but it’s still bad everywhere.  Though there are wider gaps in eight states and more than a third of the US metro areas, there’s little good news in the more granular details.  New York, Florida, and Connecticut are the states with the largest gaps, but Wyoming, specifically the Jackson area spanning parts of that state and Idaho have the single largest metro gap at 132 times the average income of the bottom 99%.  132 times the average.  I don’t even know how to get my mind wrapped around that figure.  Of the 17 metro areas that accelerated inequity in recent years, 7 were in Florida, 1 was in Texas, and the Fayetteville area of Arkansas was another.

If you ever wondered what it might take in annual income to be a one-percenter, well EPI was glad to let us know that it was about $420,000.  That’s the national figure anyway.  In Texas a 1% family has makes over $1.3 million per year while the 99% average $55,000 plus, putting the state in 11th place in inequity.  Arkansas is the 13th most inequitable.  Famous as one of the poorer states in the country, the average income of the 1% in the Wonder State is over $864,000, while the 99% is scuffling at a bit over $38,000.  Louisiana is the 33rd most unequal, below the national average with the 1% making over $800,000 per year and the 99% around $45,000.  Mississippi is 41st, which almost seems good in comparison, with the 1% making around $480,000 and the 99% about $35,000.

You get the picture.  This level of inequality is absurd.  It explains a lot about politics and policy.  In America, we may be calling from the same area codes, but we’re living in totally different worlds now.