Posts Tagged "minimum wage"

Minimum Wage and Disability Applications

Maid in hotel corridor

Do applications for federal disability benefits rise, fall, or remain unchanged when the minimum wage increases?

Understanding whether the minimum wage affects disability applications is an important issue as Congress debates an increase in the federal minimum and the states have been very active: 14 states began last year with a higher minimum wage after passing new legislation or ballot initiatives. Another seven states had previously enacted automatic yearly increases in their minimums.

One possibility considered in a new study is that applications to the U.S. Social Security Administration for disability benefits could decline if wages increase enough to make a steady paycheck that much more appealing than a modest monthly disability check. But Syracuse University economist Gary Engelhardt finds that hiking the minimum wage did not reduce applications from 2002 through 2017.

Since applications didn’t go down, could a higher minimum wage increase applications instead? Some economists argue that employers, when faced with a higher mandatory wage, may lay off some of their less-skilled hourly employees or cut back their hours. This might – indirectly – be a motivation to apply for disability.

Engelhardt tested this idea in a second analysis, recognizing that it takes time for employers to make staffing changes in response to a higher wage. Once again, he found no impact on disability applications.

“Changes in the minimum wage are not moving individuals on and off” of disability, the researcher concluded. 

To read this study, authored by Gary Engelhardt, see “The Impact of the Minimum Wage on DI Participation.” Learn More

Working Multiple Jobs to Make Ends Meet

If people need to work and can work, they will work. That’s my takeaway from a new set of data that sketches a clearer picture of U.S. workers who are holding down multiple jobs.

US workers with more than one jobNearly 8 percent of workers had two or more jobs in 2018, the latest year of data available from the U.S. Census Bureau. The data also show that holding two or more jobs becomes more common during economic expansions, when jobs are plentiful, and falls during recessions, when the opportunities dry up.

But the longer-term trend is up: the share of people holding multiple jobs has slowly increased over the past two decades. In a recent webinar, Census Bureau economist James Spletzer provided a couple of reasons.

First, the country has lost millions of manufacturing jobs over several decades. They have been replaced by lower-quality jobs in retail and in service industries like health care, hotels and food preparation – and that’s where multiple job holders tend to work.

A second, related reason for working in multiple jobs is the “stagnation of earnings at the lower end of the earnings distribution,” Spletzer said. …Learn More

Federal Minimum Wage is 40% Below 1968

minimum wage figureLargely missing from the debate about raising the federal minimum wage is how much its value has eroded over the past 50 years.

The current federal minimum is $7.25 an hour. If the 1968 wage were converted to today’s dollars, it would be worth about $12 an hour.

At $7.25 an hour, a full-time worker earns just over $15,000 a year before taxes, which is less than the federal poverty standard for a family of two. The Biden administration has proposed more than doubling the federal minimum to $15 by 2025, and one proposal in Congress would begin indexing the minimum wage to general wages so it keeps up with inflation.

A $15 an hour minimum isn’t enough, said one sympathetic Florida contractor who voted in November to gradually increase the state’s mandatory minimum wage to $15. “I’d like to see some of the American people go out there and try to make a living and put a roof over their head and raise a family,” he told a reporter. “It’s literally impossible.”

Customer receiving from McDonald's drive thru serviceBut small businesses say raising the minimum wage would increase their financial pressures at the worst time – during a pandemic. At least 100,000 U.S. small businesses closed last year as governments restricted public gatherings to suppress the virus, and the Congressional Budget Office (CBO) estimates a higher federal minimum could eliminate 1.4 million jobs.

This evidence ignores the complexity of low-wage workers’ situations. Employee turnover is extremely common in low-wage jobs in fast food establishments, for example, and workers frequently have bouts of unemployment that further reduce their already low earning power. Raising the minimum wage could somewhat compensate for their spotty employment and provide more money for essential items. And while the CBO warns of job losses, it also predicts that a higher federal minimum wage would lift 900,000 million workers out of poverty.

Many states have approved incremental automatic annual increases, and a $15 minimum wage has been approved in eight states, including Florida. Voters – over the objections of the Florida Chamber of Commerce – approved raising the state’s minimum wage from $8.65 this year to $15 in 2026.

“We won’t get fifteen for another five years. We need that now,” an Orlando McDonald’s worker, Cristian Cardona, told The New Yorker.

Once again, inflation is a problem. “By the time we get fifteen, it’s going to be even less,” he said. …Learn More