In addition, contrary to what many people believe, increases in minimum wage do not help in reducing poverty. The Employment Policies Institute, a fiscally conservative think tank, reports examined states that raised their minimum wage between 2003 and 2007 and found no evidence suggesting higher minimum wages reduced poverty rates.
According to the Bureau of Labor Statistics, minimum wage earners tend to be young. Employers can pick and choose people to hire because so many young, unskilled workers look for work. Employers may also cut benefits and hours. They can substitute more-skilled workers for less-skilled workers.
Employees who receive tips, individuals working in food service for example, make up the largest group of people who do not receive minimum wage. Tipped employees earn merely $2.13 an hour. An employer’s rationale is that tips make up the rest of an employee’s pay.
Director and co-founder of the Restaurant Opportunities Centers United, Saru Jayaraman told Moyers & Company how people don’t make a reasonable living through their tips.
“Imagine your average server in an IHOP in Texas earning $2.13 an hour, graveyard shift, no tips. The company’s supposed to make up the difference between $2.13 and $7.25 but time and time again that doesn’t happen.”
Domestic American workers who provide companionship services also make up a large portion of people who make less than minimum wage. The duties of these workers vary from providing medical care to the elderly and the disabled, to helping with fundamental tasks like bathing, dressing, cooking, transportation, shopping, and eating.
Three and a half million people are paid well below the poverty line for a family of two, either minimum wage or less, totaling close to $15,080 a year. Moreover, millions more receive a slightly higher income.
Regardless of political party affiliation, the majority of Americans polled support a minimum wage increase to $10.10. Recently many states increased minimum wage. On the other hand, some states refused to increase minimum wage. Nonetheless, states that refuse to raise minimum wage and loopholes that exclude close to two million American workers from the bare minimum should be reexamined.
The National Council of State Legislatures offers a list of 2014-2015 minimum wage by state. Did your state raise the minimum wage? Do you care?