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By David G. Taylor August 29, 2011

No possibility of a minimum wage increase

The federal minimum wage has had a contentious history. It took years of political wrangling between President Franklin D. Roosevelt, Congress, and the United States Supreme Court before a minimum wage was finally established by the Fair Labor Standards Act of 1938.

The initial minimum wage was set at 25 cents an hour. Congress intermittently increased the minimum wage over the years to keep pace with inflation. In 1997, Congress set the federal minimum wage at $5.15 an hour. It did not raise it again until the Democratic Party took control of Congress in 2007. The resulting legislation increased the wage in three stages until it reached its current level of $7.25 an hour in 2009. Although this is the lowest wage that an employer in the United States may legally pay employees, many states choose to set their rates higher. The state of Washington currently has the highest minimum wage, at $8.67 an hour.

Raising the minimum wage is often a politically rancorous issue. Proponents, often labor unions and their supporters, argue that raising the wage allows employees to earn more money and lead easier lives. In addition, with more money coming in, individuals have more to spend, which boosts the economy. Opponents of raising the minimum wage, typically business groups, argue that an hourly wage that is set too high leads to increased unemployment. An employer"s labor costs increase because of the requirement to pay employees more than the market would otherwise dictate, they say. As a result, companies hire fewer people. This argument is why Republican candidates, including presidential hopeful Rep. Michele Bachmann, R.-Minn., say they would consider eliminating the minimum wage.

Historically the Republican Party has looked less favorably upon increases in the minimum wage. In response, the Democratic Party has often used raising the minimum wage as a successful campaign issue -- most recently during the 2006 and 2008 elections.

There are at least two House bills that would increase the minimum wage in some respect. The WAGE Act would set a base minimum wage for tipped employees such as waiters and bartenders. If enacted this bill would raise the minimum cash wage of such employees (excluding tips) over time from $2.13 to $5.50 an hour. Meanwhile, the Living American Wage Act of 2011 would tie the minimum wage level to the poverty threshold for a family of two individuals. Both bills were introduced early in the year and seem to be stalled in committee. The chances of either passing in committee, much less in a full vote in the House, are remote given the Republican majority.  

Even before the United States became embroiled in its current economic troubles, minimum wage increases had been voted down several times from 1997 to 2007. It is highly unlikely, given the country"s fragile economy and the 2012 elections, that the House of Representatives will agree to a hike in the minimum wage during the dwindling months of 2011. As a result, we rate this promise Broken.  

Our Sources

Interview with Jared Bernstein, Senior Fellow with the Center on Budget and Policy Priorities.

United States Department of Labor: Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage

United States Department of Labor: Minimum Wage Laws in the States

United States Department of Labor: Fair Labor Standards Act Advisor

The New York Times, "Congress Passes Increase in Minimum Wage," May 25, 2007.

Bloomberg, "Bachmann Says She Would Eliminate Minimum Wage to Stimulate U.S. Economy," June 26, 2011.

By Lukas Pleva December 3, 2009

No sign of an increase yet

During the campaign, Barack Obama promised to increase the federal minimum wage to $9.50 an hour. This increase, he argued, would allow full-time workers to "earn a living wage that allows them to raise their families and pay for basic needs such as food, transportation, and housing – things so many people take for granted."

The federal minimum wage increased as recently as July 24, 2009, from $6.55 to $7.25. That was the third of the increases that Congress approved in 2007.

We haven't heard much from President Obama on the topic of minimum wage, except as a side issue during discussions of immigration reform and the historical role of labor unions. We reviewed his public statements since taking office and couldn't find any mention of his plans to raise it to $9.50.

We didn't find any pending bills in Congress that would raise the minimum wage. But there is a bill, introduced by Rep. Pete Olson, R-Texas, that calls for the minimum wage increase to be postponed until July 24, 2010.

We also searched statements made by Obama to see if, since taking office, he has provided a plan, or at least a broad outline, of how he plans to implement this proposal. We didn't find one.

Obama has until 2011 to keep this promise. We expect we'll probably see some progress in 2010. But there's been no action so far, so for now, we're rating it Stalled.

Our Sources

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