Fast food workers in more than a hundred cities across the country went on strike for a $15 an hour wage earlier this month. They were calling it a strike for a livable wage. Fast food workers epitomize the low-skilled working poor in America, but a $15 an hour wage is not about poverty. Rather it speaks to their desire to become respected members of the middle class.
Opponents, particularly those in the fast food industry and other low-wage employers, will naturally trot out the standard economic model that such an increase can only lead to lower employment. Because only a small fraction of the labor market earns the minimum wage, the benefits to the poor cannot outweigh the costs of lower employment, especially in a bad economy. Moreover, most minimum wage earners are not primary breadwinners, but are either spouses or teenagers.
All these arguments are wrong. First and foremost, it isn’t those who earn the minimum wage but those who earn around the minimum wage — what we will call the “effective” minimum wage, between the statutory minimum and 50 percent of average annual hourly earnings — who count.
Historically, Congress attempted to keep the minimum wage at 50 percent of average annual earnings, but failed.
The average annual hourly earning in 2012 according to the Census Bureau was $21.43. The current minimum wage of $7.25 is only 33.8 percent of the average annual hourly earning and would have to rise to $10.72 to meet the 50 percent goal.