So, How much is Minimum Wage Labor actually Worth?
Kassie Breest and Ian Dinnie
May 4, 2021
“They started me at minmum wage in 2009, something like $8.00 an hour, and by the time I left 10 years later, I think I made $13.00”
A Massachusetts mother of triplets takes a homemaking position in search of mother’s hours, but what coverage can a minimum wage job offer to a mother of four?
Well, without a degree, limited availability and a desperate need for a second income, Cathy didn’t really have the space to be shopping around for coverage. She took the job.
“Don’t Forget to Read the Fine Print” by K.Eleanor Breest
More than 10 years later, Cathy works with up to 15 clients in any given month now as a Certified Home Health Aide. The certification allowed her to find CHHA work for the State with benefits, but the physical workload is significantly more, with half the staff.
K: When did you start doing Home Health Aide Work?
C: Well, first I started work as a Homemaker.
K: That was your first job after maternity leave, right?
C: Yeah, well the triplets went into Kindergarten, so I could work.
K: and why’d you’d pick homemaking?
C: It was something I could do… and I could work for the elderly…and it said I could have mother’s hours and make my own hours…so mother’s hours are from like 9-2 when you kids are in school
Homemaking Services typically entail a homemaker to visit the home of the patient, help with meal preparation, grocery shopping, medication pickup, laundry, and light housekeeping. Without a college degree, homemaking is the easiest option for a lot of mothers.
K: yeah. How much did you make?
C: That started at minimum wage, and then I got a couple of regular raises. I think when I finally left there, there I became a home health aide for a while, and then I became a certified home health aide… had to take a course for that… and that was 10 years after I started at partners, so I was with partners for 10 years…
K: So when you started there, you were making minimum, and when you left there, you were making…?
C: I think it was 15 dollars,,, or thirteen, yeah, thirteen dollars an hour.
Even in a State known for paying its employees well, how is it that we find working class families slipping through the cracks? Lets find out.
The Federal Minimum wage has been $7.25 since July 24, 2009… that’s nearly 13 years!! The Massachusetts Minimum wage has been $13.50 since Janurary 1, 2021… that’s barely 13 weeks!!
Minimum Wage in Context
Okay, let me warn you, things might get a little bit “techy” here. I’m a research analyst, and so is my co-author, Ian Dinnie. We are both students in the Data Analytics and Computational Social Science program at Umass Amherst. What you’re about to read is our analytical take on the social construct of minimum wage legislation. Stay awake, you can cite this when your Facebook friends start arguing in the comments.
How much has it changed since then? How much had it changed before?
In 1957, Patty earned $1.50 an hour for her secretarial job. Minimum wages have changed drastically since the 1950s, but how much have they really increased? Patty’s wage in 2020 dollars is more like $9 an hour.
K: what did you do? P: they started me out as a clerk recording bills and reciepts, and then they promoted me to a secretary K: so was $1.50 the going rate at the time? was that a good paycheck? P: oh yeah, and we always worked on Saturday mornings to double our salary
They have not increased, at least in terms of 2020 dollars, and the benefits have definitly not gotten any sweeter. In 1968, legislators believed minimum wage labor was worthy of $8.55 per hour. Back in the 60s, workers actually earned 25 cents per hour, but in the graphic above (you gotta click the hyperlink, sorry), minimum wages are expressed in real dollars, adjusted to the cost of living in 2020.
This way, it is clear to see that if the cost of living remained the same over the past 40 years or so, the Federal minimum wage today is actually $1.30 lower than it was in 1968.
What is Minimum Wage?
The Federal minimum wage is a nationally mandated wage floor. A wage floor is the bottom dollar, the lowest dollar-per-hour rate that can be offered to a person working a job in the United States. By setting a wage floor, the minimum wage creates a minimum standard of living to protect employees and stabilize the economy. The minimum standard of living is the bare minimum amount of money, in relative dollars, that a worker in the labor force needs to earn in order to sustain their health and well-being. The labor force affected by a minimum wage according to the Fair Labor Standards Act includes only individuals older than 20 years old, who are neither disabled nor receive tips, like a waitress or an Uber driver. These workers earn subminimum wages and are covered elsewhere in the FLSA…for less than that of minimum wage workers.
Who sets the Minimum Wage?
States have the power to write their own Minimum wage law, but the rates must be at least that of the Federal rate… or so I thought. In 2020, State mandated minimum wages fall into one of four categories– higher than the Federal, lower than the Federal, or the same as the Federal (some of these states have no State minimum wage law, others do have State law, but it states that Federal law applies). How can a state have a lower wage than the Federal minimum? What determines the minimum wage? And how does it get set?
How is the Minimum Wage set? How is it Reset?
The Federal Labor Standards Act is written by the Wage and Hour division of the U.S. Department of Labor and it covers other employee protections aside from just minimum wage. And the process for updating? Well, each state and the federal government has their own processes, and it can be done - Painfully, by making Amendments to Constitution. - By default, by adopting the Federal Minimum Wage. - Automatically by indexing it to Inflation. - Incrementally, by implementing annual increases.
Who does it apply to?
The US Department of Labor explains in their Handy Reference Guide to the Fair Labor Standards Act that:
“All employees of certain enterprises having workers engaged in interstate commerce, producing goods for interstate commerce, or handling, selling, or otherwise working on goods or materials that have been moved in or produced for such commerce by any person, are covered by the FLSA.”
However, when the Congressional Research Service breaks it down in The Federal Minimum Wage: In Brief, they state:
“The FLSA extends minimum wage coverage to individuals under two types of coverage—“enterprise coverage” and “individual coverage.” An individual is covered if they meet the criteria for either category. Around 139 million workers, or 85% of all wage and salary workers, are covered by the FLSA."
The US Department of Labor Implies here that all employees are covered by the FLSA, while the CRS breaks down coverage like home insurance with two categories, and one of them isn’t even a human. Without even touching the legal language used in the FLSA itself, two different Federal documents meant to guide citizens through legislation provide conflicting information on the very basics– who the law even applies to! So, how can we assess the disparities introduced by minimum wage legislation?
Currently, different minimum wages apply to different groups of people across the US
Current State of Minimum Wages
In 2020, there are 24 different Minimum Wage rates currently active across the country. Though 18 of those are higher than the federal minimum, doesn’t it seem like paying everyone different wages is a really good way to disenfranchize the working class? Idk, just me?
US Minimum Wage Rates in 2020
Inconsistencies in minimum wages the US and over the past 30 years have systemically suppressed the working class and minimum wage workers. Though the FLSA prevents an employee from earning less than the minimum, State legislation in many of these Yellow states do not have wages that are even equal to that of the Federal rate in 2020… $7.25 an hour.
It is important to identify who exactly we are talking about when we use the phrase “minimum-wage workers”. It is important to dispel the myth that minimum wage jobs are for teenagers looking for work after school. In fact, according to the Bureau of Labor Statistics, teenagers constitute a minority of minimum wage workers, accounting for only 21%.
Young people do constitute a large portion of minimum wage workers, with people aged 16 to 24 accounting for 47.1% of all minimum wage workers. Still, the majority are aged 25 or older who likely depend on minimum wage jobs to support themselves and their dependents.
Unlike many issues in America, the issue of minimum wage dependency is not one that is overtly tied to racial divides that exist in our country. According to the 2019 American Community Survey, white people make up 76% of the Unite States population, and according to the BLS, they account for 73% of workers earning the minimum wage or less.
There are two variables that best categorize minimum wage workers: educational attainment and occupation. Despite making up 33.1% of the population aged 25 or older, those with a Bachelor’s degree or higher constitute only 13.8% of minimum wage workers. 51% have a high school degree or less, despite making up only 38.3% of the population aged 25 and older.
When we talk about minimum wage workers, we are mostly talking about people in service occupations, who collectively account for 71.8% of minimum wage workers. The term ‘service occupations’ encapsulates a variety of jobs, including protective services, building and grounds maintenance, and personal care services, but the vast majority of service workers earning the minimum wage or less are employed in food preparation and serving. These individuals account for a staggering 56.6% of all minimum wage workers.
Manny is an 18 year old electrician’s apprentice. Here, he talks about his time working at a ski area in Massachusetts.
K: did you make mininmum wage?
M: yeah, thats my only minimum wage job
K: how much did you make?
M: $12.75 or 12.50 i think, it was in 2019. I worked 6 hours till 10pm each night after school
He picked up a minimum wage job to suppletment his wages during the winter when he was laid off, it was still not enough for his car insurance and gas tank.
So, who are minimum wage workers? They are fairly young- though not as young as many are led to believe- have low educational attainment, and are concentrated in a small number of mostly service-based professions. These are the individuals who will be most affected by changes in minimum wage laws.
So, how much is minimum wage labor actually worth? The bottom line is… it sets the bottom line.
Identifying the Gap in Minimum Wage Legislation
The federal minimum wage is a nationally mandated wage floor, which defines the minimum standard of living in the United States. The standard of living, in whatever dollar value the current year allows, is intended to protect the health and well-being of all workers in the labor force by defining the bottom line.
By preventing minimum wage workers from earning cents per hour, legislation implicitly prevents college-grads from earning dollars on the hour, and so forth. But what happens when the dollars earned by workers of the same minimum wage occupation who work same hours, with same credentials, maybe even at the same company, are not the same?
It is important to understand how much minimum wage labor is actually worth, because inconsistencies among the jurisdictions that decide the minimum standard of living in this country are negatively and disproportionately impacting the working class of America.
Does Home Health Aide work in Texas require more than that of Georgia? Is the cost of living that much different in Wisconsin as opposed to Minnesota?
When discussing how minimum wage laws influence the living standards of those they govern, it is important to compare outcomes of states that are fairly similar despite their differing minimum wage policies. Massachusetts and Texas can be considered suitable for comparison due to their economic and demographic compositions. Both states are city-dependent: 89% of Texas’ population lives in a census-designated Metropolitan Statistical Area compared to Massachusetts’ 79% (ACS B01001 and Texas Comptroller). Furthermore, both states are heavily reliant on the Health Care, Educational Services, and Retail Trade industries to employ their populations.
These economic and demographic similarities are contrasted by vastly different cultures and governments. Of the many differences between the two states, their differing minimum wage levels is one of the most pressing. The difference in minimum wage is especially striking when juxtaposed to the Federal minimum wage.
The above figure shows that for a long time, both Texas and Massachusetts kept pace with and rarely exceeded the federal minimum wage level. This changed in 2000, when Massachusetts upped their minimum wage level to exceed that of the Federal level, while Texas remained below. This trend has continued into the present day, with Massachusetts’ minimum wage being nearly twice as high as it is in Texas, or at the Federal level ($13.50 in Massachusetts, versus $7.25 at the Federal level and in Texas).
This figure also highlights the importance of the Federal minimum wage as a standard to which state governments must hold themselves up to. The gap between Texas’ and the Federal government’s minimum wage levels begs the question: if the Federal government hadn’t made Texas raise their minimum wage, would they have ever done it on their own?
Another natural question to arrive at when observing the differences in minimum wage between Texas and Massachusetts is how their low-income populations are faring.
Using the Department of Health and Human Services (HHS) poverty thresholds as a benchmark highlights the need for both the Federal Government and Texas (and other states who have low minimum wages) to increase their minimum wages.
According to HHS, a household of three (the average household size in both MA and TX) needs to earn more than $21,960 a year to stay out of poverty. This translates to earning $10.98 per hour for 40 hours per week for 50 weeks per year. By these simple measures alone, it is clear that Texas’ minimum wage earners are not earning enough to provide for themselves and their families without working exorbitant amounts of hours.
The severity of the situation is made more clear through imagery. Imagine for a moment a single mother of two living in Texas. Imagine that the mother is still quite young, and wasn’t given the same opportunities that many are given to earn a high wage, and is at the moment earning the minimum. That mother of two, while living in Texas, needs to work a staggering 61 hours per week just to be at, not exceeding, the poverty level for a household of three. Conversely, a single mother of two in Massachusetts can work 40 hours per week at the minimum wage and earn a yearly income about $5,000 above the poverty line.
Is the single mother of two in Texas any less deserving than the one in Massachusetts? Clearly not. There is clearly no logical reason as to why the Texan mother- or any other person- should have to make a choice between poverty and a reasonable work-life balance. Unfortunately, her government is making that choice for her.
These economic and demographic similarities are contrasted by vastly different cultures and governments. Of the many differences between the two states, their differing minimum wage levels is one of the most pressing. The difference in minimum wage is especially striking when juxtaposed to the Federal minimum wage.
Okay… now I’m angry and educated, what can I do?!
Next Steps
Keep talking about it!!
How do we get policy passed? Its all about the way we define our policy issue. and right now, activists (and Joe Biden) aren’t getting much traction by preaching the big 1-5.
“Joe Biden raises the Minimum Wage for Federally Contracted workers” on Twitter
By disenfranchising minimum wage workers, the current system for setting the minimum wage in the US intentionally and systemically suppresses the working class in America. To organize across so many systems of government, we need to be speaking the same language, this is our road to a common ground.
Keep up with this research
By doing comparative institutional analysis, we can identify the language in State legislation that is correlated with positive measures of health and well-being in states. The legislation with language that is most conducive to effective policy can act as a model for reform. It’s time to unionize with the working class.