US: Congress votes to marginally raise minimum wage

But who is getting richer?

Shortly after taking office, Democrats in the new Congress proposed to raise the minimum wage to $7.25 per hour (phased in over two years). Does this mean that they have suddenly stopped supporting the interests of big business and started supporting ordinary people instead?

A raise is long overdue. Because of inflation, the minimum wage buys much less now than when it was last increased ten years ago. Its buying power is now the lowest it has been in over 50 years.

In the time since the last minimum wage hike, healthcare and housing costs have gone through the roof. Today, $5.15 per hour ($9,600 per year after taxes) is not even enough to keep a single person out of crushing poverty, never mind support a family.

This minimum wage increase will directly raise the wages of the roughly 6 million workers making less than $7.25 per hour. Also, millions of other workers will see their wages increase as employers across the country are forced to offer more to compete for employees.

All workers should support any increase in the minimum wage, even if the increase is way too small.

Not enough

While increasing the minimum wage is essential, $7.25 is not nearly enough to cover all basic expenses: food, rent, healthcare, transportation, education, and quality childcare. It is still a poverty wage.

If the new Democrats in Congress are really concerned about the livelihoods of America’s poorest workers, why did they stop at $7.25? Businesses argue they simply can’t afford higher wages, but they have plenty to spend on their own benefits.

Compensation for CEOs has climbed 71% since 1997, the last time the minimum wage was increased. In 2005, Yahoo’s CEO, Terry Semel, made $231 million and ExxonMobil declared the largest single-year profits ever made by one corporation, $36 billion.

Not to be left out, Congress members have voted themselves $30,000 in raises since 1997. They also made sure to write into law automatic cost of living adjustments for themselves. That means that every year they automatically get a raise to counter inflation.

They did not give the same deal to minimum-wage workers. Two years from now, when the new minimum wage takes effect, it will be worth less than $7.00 because of inflation.

Congress has raised the minimum wage several times since its historic high in 1968, but in general it has not kept up with inflation. If it had, it would be $9.26 today (and would be almost $10 in two years)

There should be a law that Congress cannot raise its own salary without raising the minimum wage by the same amount. Then maybe workers would get paid what they need to survive rather than what is acceptable to big business.

Democrats in Congress

Even though any raise in the minimum wage is better than nothing, that does not mean that ordinary people should support Democrats in order to get it.

The Democrats are willing to raise the minimum wage, but only enough to keep people voting for them, and they will never raise it more than big business is willing to accept. That means that the minimum wage in general continues to drop (see graph). Funded by corporate dollars, they are willing to raise the minimum wage only as long as it does not cut into corporate profits too much.

If the Democrats were really interested in helping working people, they would have raised the minimum wage to $12.50 per hour ($500 per week), and they would not wait two more years to do it. In order to do that, however, they would have to decide that they cared more about ordinary people than about corporate profits.

As Malcolm X said, “If you stick a knife nine inches into my back and pull it out three inches, that is not progress.” Instead of supporting politicians who spend their time supporting big business, workers need to build a political party that really fights for their interests.

All inflation adjustments are based on the CPI-U calculated by the U.S. Bureau of Labor Statistics. http://www.bls.gov/cpi/

This article appears in the January/February 2006 issue of ‘Justice’, paper of Socialist Alternative (CWI in the US)

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