7.2 - Minimum Wage, Maximum Problems

Mindy, six months pregnant, worked the 6 A.M. through 2 P.M. shift as a waitress. It was so busy that on many days she didn’t get a chance to stop and eat. Sometimes she’d put a plate of French fries out in the kitchen so she could pop one in her mouth as she rushed by to pick up a soda order. She was on her feet for eight hours every day, and by the time Mindy was at the end of her second trimester, she was thoroughly fatigued. At about that time, Mindy almost fainted at work. So she sat down for a moment in the restaurant to pull herself together, and a person at one of her tables didn’t miss a beat, calling out, “Ma’m, we still need our coffee.”

At that time, she and her husband Ruben had three jobs between them—Mindy with one job, and, Ruben, with two. All three jobs were paid minimum wage. Even with tips, making ends meet was a struggle. Mindy worked through most of her first pregnancy at a restaurant in downtown San Francisco. It was a long slender room, almost like a train car, with eleven booths and twenty counter seats. Decorated in red and white, with James Dean and Marilyn Monroe looking down from their spots on the walls, this was a major tourist attraction and had a high traffic flow of people from all over the world stopping in for a bite to eat.

Mindy’s body was getting stressed from the fatigue and her doctor wrote her a note that specified she needed regular breaks. “It was the constant motion and the duration of not getting enough food,” she comments about working through her pregnancy. “And the baby was growing erratically; she wasn’t steadily increasing in size. The doctor said, ‘Your body is stressed and your baby is showing signs of that stress.’ ”

Mindy didn’t have healthcare through her job, but was able to see the doctor because she qualified for health insurance through a state of California low-income insurance program called Access for Infants and Mothers (AIM), “It was pregnancy specific insurance, so I was covered for the entire pregnancy and for two months after giving birth. The baby is covered for the first year of life.”

Minimum Wage
by Madeline Janis-Aparicio, Executive Director, Los Angeles Alliance for a New Economy, and Jessica Goodheart, Co-Director of Research, Los Angeles Alliance for a New Economy


Established in 1938 as part of the Fair Labor Standards Act, the federal minimum wage was intended to provide workers with a minimum standard of living. The basic notion—supported by the majority of Americans— is that a decent day’s work deserves a decent day’s pay.

However, the minimum wage—$5.15 per hour—is not enough to keep even the smallest family above the federal government’s extremely low poverty threshold. Furthermore, its value has been declining over time. The real value of the federal minimum wage in 1968 was $7.54, 46 percent more than the current hourly minimum of $5.15. A full-time worker earning the minimum wage would bring home only $10,712. In addition, the minimum wage, which is not adjusted for inflation, does not reflect rising costs of housing, healthcare and—with women increasingly a part of the workforce—childcare.

Opponents of minimum wage increases argue that they merely impact teenagers who are not the primary earners in their family. But the ten million or so minimum wage workers contribute—on average—54 percent to their family’s weekly earnings. Most of these workers (58 percent) are women, and the vast majority (71 percent) are twenty or over.

In addition, opponents argue that minimum wage increases cause job losses, harming the very workers they are intended to help. However, economists have studied the question extensively in New Jersey and other states that have raised the minimum wage, and found no evidence that modest minimum wage increases cause job loss. The stagnation of the federal minimum wage has prompted states, local governments, and even universities to establish minimum wage standards that better reflect the idea that workers deserve a living wage.

She found out about this state health insurance program when she went into a clinic for a pregnancy test to confirm the test she took at home. It was a walk-in clinic that she came across on an advertisement on the bathroom wall at work. “The advertisement said, ‘Think you’re pregnant? Come in to get a verification test and find out about your different options,’ ” recalls Mindy, “But we already knew we wanted to keep the baby,” and just wanted to confirm the pregnancy. This clinic helped Mindy apply for the AIM healthcare program and also got her in touch with the WIC office to help with food. WIC is the Special Supplemental Nutrition Program for Women, Infants, and Children, a federal government assistance program that provides nutritious food to qualifying lowincome women, infants, and children up to age five.10

Without this subsidized help, Mindy and her family wouldn’t have had healthcare coverage, and would have struggled to pay for food with just the earnings from their minimum wage jobs. She was working so hard to keep up with the bills that the fatigue was complicating her pregnancy.

Mindy ended up having to take early maternity leave, and even then had to have an emergency C-section because her amniotic fluid was so low. “Luckily, she’s fine now,” says Mindy who later had to quit her job to care for her own health, as well as to take care of her daughter, then later also for her son. At the time it also made economic sense for Mindy to stay home with their children—childcare costs would have dwarfed her minimum wage salary. “I couldn’t afford childcare while I worked. I just didn’t make enough,” says Mindy. “If there was some type of childcare assistance program through work or the state then I could have worked.”

Losing Mindy’s wages was a big blow. The wages of two parents are often needed to support a family these days. When those wages are not adequate to cover the costs of raising children and other basic needs like housing, heat, utilities, groceries, childcare, clothing, health coverage, and transportation costs, then we have a significant problem. Raising the minimum will better allow families to meet those needs on their own.11

Mindy’s family ended up struggling to make ends meet on just the wages her husband brought in from his two minimum wage jobs. Her situation with one parent making minimum wage to support a family isn’t rare. In fact, “the average minimum wage worker brings home more than half (54 percent) of his or her family’s weekly earnings,” finds the Economic Policy Institute.12

One of her husband’s jobs was at a cozy sidewalk café, the kind where BLTs cost $9, and the hamburgers come with freshly cut fruit instead of French fries. There were six or seven outdoor tables, and a small interior with five or six tables on the first floor and a narrow staircase up to a few more tables. The walls were covered with the pictures, sometimes autographed, of famous people who had dined at the restaurant. For an added touch of class, each table had a small vase with a flower. The restaurant shared the street with expensive stores like Giorgio Armani, BCBG, Kenneth Cole, and local upscale boutiques.

Federal Minimum Wage


By working a 52-week fulltime job without unpaid breaks, the federal minimum wage comes to $10,712 per year.

The people who worked in the restaurant, however, couldn’t afford to shop at those stores. Ruben, Mindy’s husband, now the sole wage earner in his family of three—nearly four—was struggling to support his family as he brought home minimum wage and tips for his work as a waiter. He also had a second job waiting tables at another restaurant, where he was paid minimum wage as well. At that time, San Francisco was one of the few cities which passed a minimum wage increase within their city limits. The city had a minimum wage of $8.50 per hour,13 which is significantly higher than the $5.15 per hour federal minimum wage.14

In fact, there’s been some movement to raise the minimum wage in cities and states across the country through citizen initiatives, state legislatures, and other elected bodies. Several cities— like San Francisco—have successfully raised the minimum wage within their city limits, and fifteen states have minimum wages that are higher than the federal government’s $5.15 an hour.15 Florida, with a minimum wage in 2005 of $6.15 per hour, is one of those states.16 Their minimum wage increase was voted in by citizens who also voted for George Bush for President in 2004. Clearly, this is not a partisan issue.

A Rising Tide of Economic Insecurity
by Jacob S. Hacker, Ph.D., Peter Strauss Family
Associate Professor, Yale University


Everyone knows economic inequality has increased dramatically. Less well known is that economic insecurity has increased even more dramatically. Since the early 1970s, the year-to-year instability of family incomes has skyrocketed, even as middle-class incomes have risen only modestly.

The signs of this “great risk shift” are everywhere. Personal bankruptcy rates have increased fivefold in the last quarter century, to roughly 1.5 million. The mortgage foreclosure rate has increased threefold, and family debt is at record levels. Meanwhile, employers have shifted from so-called defined-benefit pensions that promise a fixed benefit in retirement toward “defined-contribution” pensions, like 401(k)s, that greatly increase the degree of risk placed on individual workers.

For more than a decade, moreover, the ranks of the medically uninsured have expanded with little interruption. Over a two-year period, one in three nonelderly Americans spend some time without health coverage. In 2004, more than 14 million nonelderly Americans paid more than a quarter of their earnings on medical costs and premiums. And health costs and crises are a factor in nearly half of all personal bankruptcies.

Economic insecurity hits women, minorities, and the less well educated hardest, because their incomes fluctuate the most and they are least likely to have access to job-based benefits. Yet insecurity has worsened rapidly across nearly every segment of American society. It is a common problem that can and should be the basis for common solutions.

Yet, under the banner of “the ownership society,” many conservative politicians are calling for measures that will actually make Americans more insecure—measures like private accounts in Social Security that will shift even greater risk onto Americans’ already burdened shoulders. America’s hardworking families need stronger floodwalls against the rising tide of economic insecurity, not to have those floodwalls torn down.

It’s hard for a family to live on minimum wages. The cost of living is just too high. Contrary to popular belief, the majority of minimum wage earners aren’t single teenagers who need to bring in a little extra for pocket 370, many families struggle with these issues: A report found that 70 percent of workers who would benefit from an increased minimum wage are adults age twenty or older.17

No, these aren’t just teenagers with summer jobs.

While Ruben was juggling his two jobs, he and Mindy were also raising their daughter, Kennedy, and Mindy became pregnant with their second child. What did living on the minimum wages of one earner (holding two jobs) mean for her family? “We couldn’t buy the groceries we wanted. We were cutting back on fruits and vegetables because they are the most expensive. Actually, we were living mostly on WIC items, like the cheese, eggs, and milk.”

The current federal minimum wage is the result of the last increase in 1996–97 (It was a stepped wage increase—with part of the increase in 1996 and the second part in 1997). Between the time the minimum wage was last raised and 2005, inflation has worn down the wage value: The $5.15 per hour in 2005 is equivalent to $4.23 per hour in 1995.18 The minimum wage is actually losing ground over time. And, it’s abundantly clear that few adults can get by on the federal minimum wage without public assistance of some kind.

More women than men are stuck in minimum and low-wage jobs. In fact, a 2005 study found that between 1992 and 2003, 41 percent of women remained in low-wage jobs, compared to only 34 percent of men (48 percent of men moved up to an abovewage job during that time period, and only 32 percent of women made the jump up).19 Stagnant minimum wage rates enable employers to pay the lowest rates to our most vulnerable citizens. In the end, there’s little question that mothers are among the most vulnerable workers in our society, making an average of 24 percent less than men.20