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.

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Want More Overtime? Raise Pay in the South and in Retail!

Little Rock       The Department of Labor has issued its revised rulemaking proposal on overtime eligibility for nonexempt workers.  A federal judge in Texas had halted the Obama administration’s efforts to move the number from $23,660 to double that amount at $47,476 annually.  Instead, the current proposal would move the number to $35,308 based on 2017 figures, and, reading the DOL proposal more closely, perhaps higher based on 2018 figures after the comment period, if this proposal passes muster.

Did they pull the $35,308 figure out of their ear or what?  Although I had somehow never realized this previously, their justification this time, as it has been in 2004 at the time of the last increase in overtime pay, was tagging the rate at 20% of the average wage of salaried employees in the South as well as retail workers nationally.  The Obama Administration had come up with the $47,476 figure by trying to scale the benchmark up to 40% of the average wage of salaried employees in the South.

Hopefully, you’re starting to get the picture.  It’s not a question of “the South shall rise again,” so to speak, but that everyone cannot rise again without the South.  There’s a certain cruel justice in this, as I write from deep in the South.  It’s a reminder that we have a national workforce rather than a regional one, even if Congress’ stubborn refusal since the George W. Bush administration to raise the federal minimum wage has increasingly forced local and state efforts to raise wages as politicians continue to ignore the economic reality of workers widening the gap for workers in the USA based on location.

The DOL this time around claims this bump will benefit 1.1 million workers, which is significant.  Others point out that the Obama DOL claimed 4 million workers would become eligible for overtime.  In a footnote in the current proposal, the DOL estimates that an additional two million workers would likely benefit who have been “nonexempt” (which means in English that they were not exempt) but were making over the 2004 allowable minimum weekly level of $455, but less than the newly proposed level of $679 per week, because they would “now fail both the salary levels and duty tests.”  The DOL in this footnote says that such workers would “have their overtime-eligible status strengthened in 2020” when this new rule would go into effect, which in non-legalese, plain English would mean that another 2 million workers would be able to collect overtime.   The proposal also adds another 200,000 workers who were making over $100,000 under the old rule and would now be eligible with the threshold moved up over $140,000.  Another point worth making is that the new proposal also mandates a review and adjustment every four years, which means that workers will not be stuck for a full fifteen years in the future, and that’s very important.  In short, the wage level is lower, but the number of potential beneficiaries is not as wide it would seem as reports are making it.

Everything being equal, and, frankly, it never is, this is not a bad deal.  If anyone wants better, the new rule is pointing out a clear path for future organizing.  If we can organize enough workers in the South or in retail nationally to move the average wages up, then all the benefits will trickle up from the bottom.

To me that sounds like a plan, though I doubt if many will be lining up to make it happen.

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