A Key Demand of the 1963 March for a Decent Wage Remains Unmet
The Real Value of The Minimum Wage is Less Today Than It Was in 1963
Raising the minimum wage was one of the economic demands of the March on Washington for Jobs and Freedom that took place 50 years ago. At the time of the march, the federal minimum wage was $1.15 and the demand called for an increase to $2.00. A new Economic Policy Institute (EPI) report finds that the demand has not been met. Had the $2.00 minimum wage been instituted at the time of the march, today it would be worth $13.39—far more than today’s $7.25. In To Work With Dignity: The Unfinished March Toward a Decent Minimum Wage, EPI research associates Sylvia A. Allegretto and Steven C. Pitts present the historical context that gave rise to the demand for a livable wage, trends in the real value of minimum wage and the impact on black workers. They show that even with periodic increases in the minimum over time, it has not kept pace with rising costs, average worker wages or productivity.
“Organizers of the March on Washington knew that a stronger minimum wage was necessary to improve the lives of all workers,” said Allegretto. “Fifty years later, low-wage workers cannot make ends meet. Clearly this goal of the march remains unmet.”
Since the march, the actual purchasing power of the minimum wage adjusted for price changes over time has fallen. Today’s minimum wage of $7.25 is 13 percent less than the 1963 march-era wage. Today’s low minimum wage leaves many working families in poverty. In 2012, the poverty line for a family of four was $23,283, while a full-time worker making minimum wage earns about $15,000 a year. “Raising the floor on wages makes good economic sense, it will boost the consumer demand that spurs businesses to hire and grow,” said Pitts. “Making a decent living gives workers well-deserved dignity.”
All ethnic groups would benefit from a minimum-wage increase. However, black and women workers would benefit the most, as they are disproportionally minimum wage workers. If the minimum wage were raised, workers making the minimum would see a direct increase in earnings and those earning slightly above it would also see a bump, as employers increase their wages to maintain their relative position to the minimum-wage earners. Combining the direct and indirect impacts, 14.1 percent of all workers affected by an increase in the minimum wage to $10.10 (the proposed Fair Minimum Wage Act of 2013) would be black, greater than the proportion of blacks in the overall workforce, which is 12 percent. Similarly, Latinos would constitute 24.6 percent of all affected workers, which is larger than their 16 percent share of the overall workforce. White workers would make up 54.1 percent of all workers who would receive higher wages.
Allegretto and Pitts also discuss the plight of tipped workers a class of workers created by the 1966 amendment to the Fair Labor Standards Act which allowed for a ‘tip credit’ (a provision which allows employers to use tips, provided by customers, as credit toward a worker’s wage); thus a subminimum wage for tipped workers was established. At that time, the sub-wage was designated to be half of the regular minimum wage. Today’s federal tipped wage of $2.13 is just 29 percent of the $7.25 federal wage floor—and it has been stuck at $2.13 since 1991. This disparity also disproportionately affects blacks. Nineteen states follow the two federal wage floors where over a third (39.3 percent) of all workers and more than half (54.1 percent) of black workers reside. The low tipped wage is responsible, at least in part, for the high poverty rate of tipped workers (14.5 percent) which is far higher than the rate for non-tipped workers (6.3 percent).
The authors also discuss new research which shows that minimum-wage increases have not resulted in reduced employment, they have helped to reduce high turnover that is costly to employers, they increase consumer spending which boosts the economy, and they help to reduce inequality and poverty.
This paper continues the Economic Policy Institute project The Unfinished March, which reviews America’s civil rights successes as well as the significant amount of civil rights work that remains to be done. Each report addresses a specific civil rights goal, the progress that has or has not been made, and, if necessary, the policy measures needed to fully realize the goal.