To illustrate this in real time, the Center for Economic and Policy Research (CEPR) has created the Minimum Wage Workers Pay Cut Clock. It keeps track of how many dollars America's minimum wage workers have lost since July 2009. It flips every second, showing how much more money those workers are losing as long as the U.S. minimum wage remains stuck at $7.25 per hour.
If you click on the Pay Cut Clock today, you'll see that the cumulative loss (if the minimium wage had maintained its 2009 value) is over $6 billion dollars. Those are dollars that haven't been spent at local businesses — and haven't been supporting our Main Streets — over the past five years. As "zillionaire" Nick Hanauer explains his reasoning for lifting the minimum wage, "When workers have more money, businesses have more customers — and need more employees."
Even if the minimum wage were to catch up to where it was in July 2009, it would still be far below its historical level. The peak year for the U.S. minimum wage was 1968. So, CEPR has put together a second clock that shows how many dollars America's minimum wage workers have lost since then. It also flips every second, keeping track of how much money they're losing as long as the federal minimum wage remains below its historical peak. If you click on it today, you'll see that the cumulative loss (if minimum wage had maintained 1968 value) is over $300 billion.
After getting a sneak preview of the Pay Cut Clock, Chris Owens, executive director of the National Employment Law Project, put the ball straight in Congress' court:
This 'pay cut clock' shows just how much congressional failure to raise the minimum wage is costing America's working families and the economy overall. With millions of workers losing billions in pay since 2009 — and hundreds of billions of dollars since the high water mark for the minimum wage in 1968 — it's no wonder families are falling farther behind and income inequality has exploded even as corporate profits and CEO compensation soar.
Those opposed to raising the minimum wage say that an increase will lead to job loss. However, this is one of the most-researched topics in economics, and the vast majority of studies show little to no employment effects from minimum wage increases. Earlier this year, Goldman Sachs took a quick look at employment data and found (here, behind a paywall) that those states that increased their state minimum wages at the beginning of 2014 didn't suffer from inordinate job losses.
A simple extension of that analysis to include more recent months of jobs data and found that the average change in employment for the 13 states that increased their minimum wage was +0.99 percent, while the remaining states had an average employment change of +0.68 percent. In other words, the states that saw an increase in their minimum wage at the beginning of 2014 have seen slightly stronger job growth than those states that did not. While this certainly does not prove cause-and-effect, it does seem to make it hard to say that increasing the minimum wage will kill jobs.
Even if you tire of the back-and-forth of economic and political arguments, there's no denying that as long as the federal minimum wage stays stuck at $7.25, America's minimum wage workers are facing a constant pay cut, one that increases every second. The Pay Cut Clock shows it happening before your very eyes.
Woo is the director of domestic policy at the Center for Economic and Policy Research.