Fiscal Cliff Failure Could Destroy Minimum Wages Gains In 10 States

Author: December 31, 2012 1:43 pm

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Good news for minimum wage workers in 10 states – 2013 may mean a bigger paycheck. As reported by CNN Money, Vermont, Ohio, Florida, Missouri, Colorado, Montana, Oregon and Washington are all going to be raising the minimum wage on New Year’s Day, meaning a direct increase in wages for almost a million Americans.

Wages in each state will go up from 10 to 15 cents an hour, resulting in hundreds of extra dollars per year for each worker. Minimum wage is going up in these states because of innovative “indexing” laws that tie the bottom-barrel wages levels to the cost of living in order to keep the real spending power of such wages consistent over time.

The hard-earned dollars of most minimum wage jobs in the nation could take a beating though, if Congress doesn’t address the payroll tax deductions put in place in 2010 – something it may just do in time, according to the President’s press conference earlier this afternoon. The two percent reduction granted there would immediately wipe out any raise in pay for minimum wage workers if it were removed.

The national minimum wage currently sits at $7.25 an hour, with some states requiring additional pay above and beyond, such as Washington, where the minimum wage sits at $9.19 an hour. To put this into perspective, the real median income in the US in 2011 was $50,054. An individual working a minimum wage job earns $15,080 a year, meaning it takes four such jobs just to come out ahead of the national average (3.35 to equal it, if you’re curious).


Or, for more realistic terms, consider the cost of filling up at the pump. Right now, the national average for a gallon is $3.29. If you consider an “average” tank size of 16 gallons:

Minimum Wage of $7.25/hour):

16 gallon tank x $3.29 per gallon = $52.64

$52.64 per tank divided by $7.25/hour = 7.26 hours, nearly a full day of work to fill a gas tank once.

National Median Wage ($24.06/hour)

$52.64 per tank divided by $24.06/hour = 2.1 hour to fill a gas tank once.

For the record:

National CEO Average Pay of $732,744 (or $352/hour)

$52.64 per tank divided by $352/hour = 0.14 hours, or roughly 8-and-half minutes

Rush Limbaugh and his $40 million annual salary? 7.2 seconds.

President Obama has signaled that a fiscal cliff deal may be close, protecting the tax cuts on 98 percent of all Americans. Hopefully that deal holds, keeping the hard-earned wages of many of America’s lowest earners in their pockets right when they need it most.

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