Minimum wage 2013: Barack Obama calls for $9 minimum wage (Video)
Updated: February 13, 2013 - 05:49 pm
WASHINGTON (AP) - If anything illustrated President Barack Obama's new sense of self-confidence, it was his State of the Union call for an increase in the national minimum wage to $9 an hour. It’s a controversial proposal as small business owners worry about paying more to employees, while those working for minimum wage would welcome any bump in pay.
The minimum wage in Virginia and Maryland is the federal minimum of $7.25 an hour. Across the river in D.C. it is $8.25, but that’s still just $17,000 a year for a full time job.
For much of the past two years, the president and his aides have worked to shed an image that he was anti-business, to bury his once-upon-a-time dismissal of bankers as "fat cats," to invite corporate and entrepreneurial voices into the White House.
The result was that one of the cogs of the Democratic Party, the organized labor movement, felt left adrift by the president.
2013 State of the Union: Read the full transcript of President Obama's address
"Working folks shouldn't have to wait year after year for the minimum wage to go up while CEO pay has never been higher," Obama said Tuesday as Democrats rose from their seats while most Republicans sat stone-faced.
Whether Obama can win in a divided Congress, where Republicans control the House and Democrats the Senate, remains to be seen. But the president's calculation is clear: If there was a time to deliver on a 2008 campaign promise it is now. And if there was an issue where labor would have his back, this would be it.
"Working people have had their workloads dramatically increased during the economic crisis, while their pay has fallen," Damon Silvers, the director of policy and special counsel at the AFL-CIO, said Tuesday night. "The president spoke tonight about raising wages as a goal of our nation's economic policy - and the labor movement will mobilize behind that goal."
To be sure, the president's proposal is more modest than it was in 2008, when he called for a $9.50 minimum hourly wage by 2011.
And while he cast the issue as one of economic fairness, he also made the economic argument that higher wages would mean more customers for businesses. He reminded his audience that even his 2012 rival Mitt Romney had at one point supported automatic cost-of-living increases to the minimum wage, though Romney later modified his stance.
The issue of economic inequality - its severity a matter of debate between liberals and conservatives - has long preoccupied Obama. In his first term, however, the recession required his immediate attention. And while his health care law was one attempt at addressing those disparities, the Republican gains of the 2010 midterm elections chastened him and his focus shifted to a debate with Congress over fiscal restraint.
But his economic aides continued to cite growing wage gaps between rich and poor as a vexing issue. A 2011 study by the Congressional Budget Office found that from 1979 to 2007, the wealthiest 1 percent of the population saw their after-tax income grow by 275 percent. For the same period, the 60 percent of the population considered middle-income saw their after-tax income grow just shy of 40 percent.
"We gather here knowing that there are millions of Americans whose hard work and dedication have not yet been rewarded," Obama said Tuesday. "Our economy is adding jobs - but too many people still can't find full-time employment. Corporate profits have rocketed to all-time highs - but for more than a decade, wages and incomes have barely budged."
The issue has the kind of populist appeal that Obama can take directly to the public. White House aides believe that after Obama's solid re-election, Republicans are on their heels and are vulnerable to public pressure. If Republicans stand fast against an increase in the minimum wage, Democrats will be sure to use it against them during next year's midterm election campaigns.
Obama's attempts to cultivate business leaders and corporate executives could help forge a compromise. Past increases in the minimum wage have come with tax sweeteners and other benefits for the private sector, particularly small businesses. A wage hike could also become part of negotiations over corporate tax rates, which Obama is willing to overhaul if they increase revenue. Republicans could fight back, saying they might settle for one or the other, but not both.
For now, Republicans aren't ceding on either.
"Republicans are going to close the loopholes but we're going to do it to lower tax rates for all Americans," Said Rep. Kevin Brady, R-Texas, a senior member of the tax-writing House Ways and Means Committee.
He added: "Our goal shouldn't be to raise the minimum wage. It should be to get people off it."
Cyrus Levy’s workplace is the streets of Southeast D.C., recruiting patients to a dental group for 75 cents more than the city’s minimum wage. He makes $9 an hour, a little over $18,000 a year if he doesn’t take a day off, but a big chunk of that money goes to help raise his daughter.
“I have to make sure she’s taken care of. I have to make sure the house is taken care of, so it’s kind of hard,” he says.
Maryann Blackman knows how hard it can be. She supported four children on minimum wage when it was just $6.50 an hour.
“The rent alone is $1,100 a month and with the income I had it only came out to $9,000 so you always had to do something extra. Rob Peter to save Paul, and then I had to get to the food bank to have food for the end of the month,” she says.
There is a similar line of thinking at the D.C.-based National Retail Federation.
“Small business owners probably didn’t wake up this morning feeling really good about it. They’re trying to work, create jobs, grow, and these are all complications, more regulation from Washington," says David French, Senior Vice President of the National Retail Federation.
But the idea is welcomed on many streets in Washington for those looking for more to those just looking for something. Some say a true living wage in Washington is $15, and the increase would help a lot of people struggling to just put food on the table.
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