The Biden Administration and the Democratic Congress have been scoring victory after victory with big legislation. Perhaps our Democratic leaders could give their surprisingly surging prospects for the mid-term election another boost with one more sensible pro-worker, pro-family piece of legislation: raising the federal minimum wage.
In 2007, Congress approved raising the federal minimum wage 41% in three steps, from $5.15 to $5.85 in 2007, to $6.55 in 2008, to $7.25 in 2009. A proportionate increase today would raise the federal minimum wage to $8.24 now, $9.22 next year, and $10.21 in September 2024. South Dakota’s current minimum wage of $9.95 will likely index up to a buck–buck and a half more than that by January 2025, but at current rates, $10.21 would boost the floor wage for Americans in 28 states.
The purchasing power of the minimum wage has eroded significantly over the last decade and a half. Inflation from 2006 to 2009 reduced the purchasing power of the $7.25 to $6.81 as measured in 2006 dollars. Today’s $7.25 has the purchasing power of $4.96 in 2006 dollars. Implement a 41% raise immediately, and minimum wage workers would have their purchasing power restored to $6.99 an hour in 2006 dollars.
Can we afford to a higher minimum wage? Other countries do. Canada‘s minimum wage is nominally equivalent to 10.22 US dollars and purchasing-powerfully to 10.07 US$. Australia raised its minimum wage in July to $14.35 US$ nominal and $13.37 PP-equivalent. Counting Canada and Australia, 16 other nations manage to pay a higher nominal minimum wage than the U.S., and 22 other countries’ minimum wages give workers more purchasing power than their totem-bottom American counterparts. $10.21 would move us to 13th place globally for nominal minimum wage and 15th place for purchasing power.
Since South Dakota voters wisely enacted indexed annual minimum wage increases in 2014, South Dakota’s minimum wage has increased 37% over 8 years. Contrary to Republican/retail doomcrying in 2014, South Dakota has seen no ill economic effects from putting more money where its mouth is on the dignity of work. According to Governor Kristi Noem, minimum-wage-raising South Dakota has “the strongest economy in the nation.” South Dakota thus provides an example to the rest of the nation for raising the minimum wage to give its workers more purchasing power and boost the economy.
President Biden and other Democrats are pushing for raising the minimum wage well beyond $10.21 an hour. But the journey of a thousand dollars (the boost minimum wage workers would get for 129 hours of work at $15 and hour) begins a few coins in the labor pool now. Repeating the 2007 raise now would restore the purchasing power that the minimum wage gave to workers in 2009, just in time to deal with another economic rough patch.