What does the average minimum wage worker look like?
It's not the teenager working summers at a mom-and-pop store. It's an adult, at least 20 years old who works full time. She's not employed by a small business down the street, she's working at McDonald's.
The vast majority of businesses hiring minimum wage workers are large corporations and national chains. Most of these corporations have not only recovered from the recession, but are profitable and financially strong.
Walmart is one of the three largest employers of hourly wage workers, employing 1.2 million people in the United States. It has gross revenue of $475 billion a year, with a net profit of $17 billion. Walmart's CEO has a base annual salary of $1.2 million and up to $30 million in additional compensation. The 575,000 full-time working men and women are paid less than $25,000 a year.
The minimum wage has failed to keep pace — falling well behind increases in worker productivity, inflation and buying power. To reflect the same buying power as it held in the 1960s, it would need to be greater than $10.50 today. McDonald's provided a sample budget aimed to help employees' manage their finances that showcases unrealistic math like $0 for heating and $20 for health insurance. Groceries weren't listed at all and the budget specifically lists a second full-time job to make ends meet.
How do these corporations expect their employees to make ends meet? By relying on taxpayer funded programs like SNAP (Food Stamps), essentially they are outsourcing the cost of feeding their employees to the taxpayers in an effort to boost profits. Raising the minimum wage is estimated to reduce national SNAP spending by up to $40 billion per year while providing working men and women the satisfaction and confidence of self-reliance.
McDonald's actually has an employee tool ("McResource") that helps their workers enroll in government assistance programs like Food Stamps and Medicaid. Fifty-two percent of families of fast-food workers are enrolled in at least one public assistance program pushing business costs of approximately $7 billion a year to taxpayers. McDonald's boosts its bottom line $1.2 billion a year with taxpayer subsidies to their workforce. Walmart more than doubles that at $2.66 billion a year, which is about $5,815 per worker and $420,000 per store. In many states, Walmart employees make up the largest group of Medicaid recipients.
This unbelievable cycle drives income inequality, which has increased consistently since the 1970s and has reached its highest level since 1928. Economic mobility has not changed in 40 years. The United States has the worst mobility rates among developed countries and it is now harder than ever for American-born children to move up the economic ladder. A child born in the bottom 20 percent has less than a 1-in-20 shot of making it to the top whereas a child born in the top 20 percent has a 2-in-3 shot of staying at the top.
Increasing the minimum wage is a start towards tackling these issues. While some will claim that raising the minimum wage will increase unemployment, studies have shown the opposite to be true. Washington state has the highest minimum wage and has seen some of the strongest job growth coming out of the recession. Increased wages leads to workers spending money and purchasing products, which in turn leads to more job creation. More money circulates in our communities and the need for state-provided services is reduced.
Support for raising the minimum wage has been growing, with better than 75 percent in New Hampshire as well as nationally now in favor. Our state minimum wage was repealed in 2011, defaulting us to the federally set $7.25. For a full-time minimum wage worker, that's an annual salary of $15,000 — well below the poverty line. We have the lowest minimum wage in New England. Isn't it time we changed that?
The House will vote on HB 1403 today, and I am confident we will send it to the Senate for its consideration. Call your representatives and senators today and urge them to support working men and women across our state.
Rep. Terie Norelli, D-Portsmouth, is speaker of the New Hampshire House of Representatives.