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Background on Minimum Wage

The Fair Labor Standards Act, signed into law by President Franklin D. Roosevelt in 1938, was passed to ensure that workers would be paid fair wages and be treated fairly. It set the minimum wage at 25 cents an hour. This law remains in effect today, periodically updated to reflect inflation. In fact, since the Fair Labor Standards Act was passed, every Democratic Administration from Truman to Clinton and the Republican Administrations of Eisenhower, Nixon and George H.W. Bush have pursued and succeeded in raising the minimum wage. The minimum wage was increased in June 2007 in three steps: $5.85 sixty days after the bill is signed into law, $6.55 in 2008, and finally to $7.25 in 2009 .

Despite that increase, the current minimum wage is inadequate. The real value of the minimum wage is now almost $3.00 below what it was in 1968. To reach the purchasing power it had in 1968, the minimum wage today would have to be at least $8.50 an hour. Among full-time, year-round workers poverty has doubled since the late 1970s—from about 1.3 million then to more than 2.5 million. An unacceptably low minimum wage is part of the problem.

While the average pay of a CEO has gone up almost 500 percent in the last fifteen years, and inflation has risen 86 percent, the minimum wage has increased by only 27 percent. A worker making minimum wage today earns only $10,700 a year when working 40 hours a week, 52 weeks a year. This is $5,000 below the poverty line for a family of three. The current minimum wage is not enough income to enable a minimum wage worker to afford adequate housing in any area of this country.

In October of 2006, over 500 economists, including four Nobel Laureates, issued a statement endorsing an increase in the minimum wage to $7.00. They argue that this raise "falls well within the range of options where the benefits to the labor market, workers, and the overall economy would be positive."

Living Wage

In addition to successful efforts to raise state minimum wages, there has also been an active push to enact "living wage" ordinances on the local and state level. While ordinances are most common in cities and counties, Maryland passed a state wide living wage ordinance in May 2007. Living wage laws require municipal governments and contractors hired by the city to pay their employees regionally-determined livable wages. The methods for calculating a living wage vary, but in an effort to have earnings better reflect area costs of living, most living wages are tied to regional housing costs.

Living wage ordinances have also been put in place by county governments and universities ranging from Des Moines to Minneapolis to Baltimore. To date, 123 cities, counties and universities have pledged to pay their employees a living wage. An addition 119 campaigns for living wages are currently underway.

The Reform Movement approved a resolution endorsing living wage campaigns at the December 1999 Biennial in Orlando, Florida. For more information on the living wage, consult the Religious Action Center's in-depth issue brief.