Minimum wage hikes in 14 states, but most fall short of Obama's goal

Minimum wage could be a key part of the Democrats' push on income inequality during the 2014 midterm election season. Wages are stagnating for many Americans.

Richard Drew/AP/File
Demonstrators rally for better wages outside a McDonald's restaurant in New York earlier this month as part of a national protest to raise the federal minimum wage of $7.25.

Fourteen states are set to raise their minimum wage in 2014, but the hikes only highlight how far most of the country remains from President Obama’s goal of a $9-per-hour minimum wage nationwide.

Even after the increases, only three states are poised to pay $9 or more. On Jan. 1, residents of Washington State will see a boost to a nation-leading $9.32 per hour, while Oregon’s minimum will rise to $9.10. Meanwhile, at mid-year, Californians will see their minimum wage jump by $1, to $9 an hour, well above the current federal minimum of $7.25.

With Democrats including Mr. Obama vowing to make income inequality a central issue during the 2014 midterm election season, the debate over minimum wage is likely to resurface in coming months. Wage stagnation is becoming a big challenge for households at most wage levels, and Democrats see the minimum wage as a key part of a broader campaign that can resonate beyond the small fraction of US workers are employed at base levels.

They point to statistics that show that, as the economy recovers from the Great Recession, average hourly earnings are rising a bit faster than inflation, but not by much. A brighter financial future, then, is not just reviving growth but ensuring that gains are distributed more evenly after years in which high-end jobs have outstripped the middle and low-end ones in pay raises, they say.

For example, during the past 10 years, pay inflation-adjusted wages for average workers have risen by about 0.3 percent per year.

Household incomes at the 10th percentile (10 percent of the way up the ladder) were essentially the same in 2011 as in 1978, according to Census data. The US median household income (50th percentile) in 2011 stood a bit below where it had been in 1989, at about $50,000.

A November Gallup poll found that 76 percent of Americans said they’d support hiking the minimum wage to $9. By contrast, small-business owners are divided on the issue, with 47 percent supporting a hike and 50 percent opposed to boosting the rate to $9.50, according to an October Gallup survey.

The Obama administration embraced the goal of a $9 minimum in an economic plan in February.

Critics warn that raising the minimum wage could hinder job creation at a time when millions of Americans are having trouble finding work. But many economists have been shifting in recent years toward welcoming modest hikes in minimum pay.

An early 2013 survey of several dozen prominent economists, by the University of Chicago’s IGM Forum, found 47 percent supported a hike to $9 an hour and adjusting the rate annually (as some states do) for inflation. Only 11 percent thought the change undesirable, while the rest were uncertain or had no opinion.

Essentially, the economists agreed the change raises the incomes of an array of low-wage workers, in part because it can have a “trickle-up” influence on what employers offer for jobs that pay a bit above minimum. But the economists split on whether the $9 wage would hurt job prospects for low wage workers.  

Aside from Washington, Oregon, and California, 11 other states are raising their minimum wage in 2014. They are Arizona, Colorado, Connecticut, Florida, Missouri, Montana, New Jersey, New York, Ohio, Rhode Island, and Vermont. Base pay in those states will range from $7.50 in Missouri to $8.73 in Vermont.

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