Ending Hunger in America, 2014 Hunger Report Introduction - Page 9

their family above the poverty line. No one can do that on today’s minimum wage of $7.25 an hour. There’s a widespread myth that most minimum wage workers are teenagers living with their parents. In fact, 80 percent of minimum wage earners are at least 20 years old.15 Some job categories are even exempt from minimum wage requirements, and workers are paid as little as $2.13 an hour. The minimum wage sets the floor and determines the pay rate of other low-wage jobs. In 2011, 28 percent of workers earned $11.06 or less an hour, with the average hourly wage for this group just $8.66.16 To put these numbers in perFigure i.6 Most Americans Are Not Benefiting From Increased spective, consider the cost of Productivity housing. Nowhere in the United Sates could someone working full Cumulative change in total economic productivity and real hourly compensation of production/nonsupervisory workers, 1948-2011 time at these wages afford a twobedroom apartment.17 According 300% to the National Low Income 2011: Housing Coalition, an average 254.3% 250 full-time worker would need to earn $18.25 an hour just to afford a two-bedroom apartment at the 200 fair market rate of 30 percent of their income. 150 Productivity The minimum wage should be 113.1% raised annually at a rate at least 100 commensurate with inflation and Real hourly compensation ideally reflecting the productivity 50 growth of the overall economy. Currently there is no schedule 0 1948 1958 1968 1978 1988 1998 2008 for raising the minimum wage; it is subject to the whims of the Sources: Lawrence Mishel, Josh Bivens, Elise Gould and Heidi Shierholz (2012), The State of president and Congress. The Working America, 12th edition, Economic Policy Institute. EPI analysis of Bureau of Labor Statisreal value of the minimum wage tics and Bureau of Economic Analysis data. peaked in 1968 at almost $10.60 in 2012 dollars.18 In other words, if the minimum wage had kept pace with inflation since then, it would be $10.60 instead of $7.25. Had it kept pace with productivity growth, the minimum wage today would be $18.67.19 That sounds incredibly high, but the reason it sounds so extravagant is simply that wages have not kept pace with productivity for all these years. The U.S. median wage—the wage that half of all workers earn less than—is $16.30 an hour. If wages across the income distribution had been rising along with productivity growth, the median wage in the United States today would be $28.42.20 Since productivity growth has in fact remained strong, somebody must be benefiting from it. As it turns out, the higher one’s income, the more gains from productivity growth one captures. Between 1979 and 2007, the top 5 percent of income earners captured 81 percent of all the growth, with most of it (60 percent of the total growth) going to the top 18?Introduction n Bread for the World Institute