April 19, 2021

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CEO pay doubled, the minimum wage stayed the same. But Americans still can’t agree on a raise.

15 min read

KEYSER, W.Va. – Jackie Hickey Butts remembers the hardscrabble lifestyle she led on $8.75 an hour as a single mother in this bucolic town in West Virginia’s eastern panhandle: No car. No television. No extras for her and her five children.

“There’s one month you didn’t pay the water bill. Then you doubled up the next month and then you did the same thing with electric,” said the 49-year-old in-home care worker who has climbed out of poverty but supports a national push for a $15 federal hourly minimum wage. She was willing to juggle expenses, “as long as I had a roof over my kids’ heads.”

But Floyd Moore, who operates a local computer repair shop on Keyser’s historic Main Street counters that a significant increase in the wage rate would force him out of business in this economically struggling town reeling from the COVID-19 pandemic.

“Most small business couldn’t handle that,” said Moore, 31, who pays minimum wage to his family members who work as clerks at his Gothic Gaming store, which sells computer and video games on top of its repair service. “We live day-to-day just like everybody else that works a regular job. The only difference is we have more overhead. We have to take care of our own home and stuff like that as well as business bills.”

Minimum wage: Rationing insulin. Skipping meals. One woman’s struggle to survive on minimum wage

TOP: Floyd Moore, owner of Gotham Gaming in Keyser, West Virginia, said raising the federal minimum wage from $7.25 to $15 would force his store and many other small businesses to close. BOTTOM: Jackie Hickey Butts, standing on Main Street in Keyser, West Virginia, recalls how much she struggled to take care of her family on minimum wage.
TOP: Floyd Moore, owner of Gotham Gaming in Keyser, West Virginia, said raising the federal minimum wage from $7.25 to $15 would force his store and many other small businesses to close. BOTTOM: Jackie Hickey Butts, standing on Main Street in Keyser, West Virginia, recalls how much she struggled to take care of her family on minimum wage.
LEFT: Floyd Moore, owner of Gotham Gaming in Keyser, West Virginia, said raising the federal minimum wage from $7.25 to $15 would force his store and many other small businesses to close. RIGHT: Jackie Hickey Butts, standing on Main Street in Keyser, West Virginia, recalls how much she struggled to take care of her family on minimum wage.
LEDYARD KING, USA TODAY

The differences are evident in Keyser, a former railroad and coal center of about 5,000 people sitting on the Potomac River separating West Virginia and Maryland. Here, the median household income is significantly lower than the national average. As a result, so is the cost of living, meaning a rise in the minimum wage would have clear ripple effects.

Look around the U.S. and you’ll see the debate about the minimum wage playing out in big cities, wealthy suburbs, small towns and on Capitol Hill. While many workers see it as a desperately needed correction to a long-outdated federal minimum, others view it as a burdensome imposition that threatens to kill businesses. 

It’s those competing forces Congress will need to contend with when the issue comes before lawmakers again, as Democratic proponents of the change vow not to back down. President Joe Biden has voiced his support for a $15 wage. 

Congress punted on the issue last month, opting to reject an effort to attach a $15 minimum wage to Biden’s American Rescue Plan, which would have more than doubled the federal hourly wage from the current $7.25.

It’s not expected to be the last attempt.

‘A starvation wage’

“Let’s be clear. The $7.25 an hour federal minimum wage is a starvation wage,” Vermont independent Sen Bernie Sanders said when he introduced legislation earlier this year to raise the wage to $15, phased in over four years. “No person in America can make it on $8, $10, or $12 an hour. In the United States of America, a job must lift workers out of poverty, not keep them in it.”

The federal wage hasn’t changed since 2009. During that time, the S&P 500 has more than tripled, average CEO pay for top companies has more than doubled and inflation has risen slowly but steadily. It would take $124.05 today to buy what $100 did 12 years ago.

In an average week in 2025, the year when the minimum wage would reach $15 per hour under Sanders’ plan, 17 million workers whose wages would otherwise be below $15 per hour would be directly affected. Ten million workers whose wages would otherwise be slightly above that wage rate would also be affected.

Here’s why the minimum wage has been $7.25 an hour since 2009

President Biden is pushing to raise the minimum wage to $15. Here’s how that would affect the economy.

Just the FAQs, USA TODAY

More: Democrats left scrambling on a $15 minimum wage now that it appears left out of COVID-19 stimulus bill

States are permitted to pass their own minimum wage rates, provided it’s not lower than the federal standard. Twenty-nine states, including West Virginia, have adopted a minimum wage above the federal rate though none are as high as $15. The remaining 21, mostly in the South and Midwest, allow businesses to pay workers as little as $7.25. 

The Congressional Budget Office concluded that setting a $15 wage would have dramatic economic effects. Up to 1.4 million jobs would be lost but as many as 27 million Americans would see a pay increase and another million would be lifted out of poverty.

Most every Democrat and a number of Republicans on Capitol Hill favor an increase but differ on how much it should be and what conditions to attach. Eight members of the Senate Democratic Caucus voted against Sanders’ proposal so there’s no clear consensus on how to move forward.

Lawmakers continue to meet on Capitol Hill as they try to fashion a proposal that could win approval. But any move to raise the amount must first get the buy-in of at least 10 Republicans in the Senate where 60 votes are required to overcome a filibuster.

“I don’t think there’s a member in Congress that doesn’t want to raise the minimum wage,” said Sen. Joe Manchin, D-W.V., who voted against the $15 wage.

He calls the current wage “criminally low” though he favors a more modest increase to $11.

But some workers say even that smaller boost isn’t enough. 

Housing, utilities, other costs keep rising

Lilian Rodriguez makes $12.30 an hour working at a McDonald’s in Phoenix, not nearly enough to afford her own place or to cobble together any savings. 

So the single mother of three shares a two-bedroom apartment with her mother and her mother’s partner. And she rides a bus two hours each way every day to get to and from work.  

“I don’t have enough money for a car,’’ Rodriguez, 32, said, speaking through a translator. “On a good day I’ll get there in an hour and a half.’’

More: Generation Z workers push for $15 minimum wage as Congress, Biden debate pay for all Americans

Lillian Rodriguez struggles to support her three children on the $12.30 an hour she earns working at a McDonald's restaurant in Phoenix.

Lillian Rodriguez struggles to support her three children on the $12.30 an hour she earns working at a McDonald’s restaurant in Phoenix.
Courtesy photo

Between her share of the rent, which amounts to $423 a month, a roughly $60 phone bill, and other expenses including groceries and child care, the $400 to $500 Rodriguez earns every two weeks doesn’t allow her to make ends meet. Her mother’s partner often chips in to help.

“Especially during this pandemic, (the price of) everything I feel is going up,’’ she says. “Food is going up. My bills are going up. Even my rent is about to go up by $200. And my salary isn’t going up … It has been a struggle.’’

While Rodriguez makes slightly above Arizona’s minimum wage of $12.15 an hour, a living wage in the Phoenix area for a single adult with three children who works full time would be $46.01 an hour, according to MIT’s Living Wage calculator, which estimates the cost of living in a particular community or region based on typical expenses.

Arizona Sen. Kyrsten Sinema was one of the Democrats who voted against the $15 proposal, angering progressives who viewed her thumbs down as insensitive to the plight of her constituents. But Sinema said her vote was less about the merits of a $15 wage than it was about the misguided attempt to attach it to the American Rescue plan, a $1.9 trillion COVID-19 stimulus bill.

“No person who works full time should be in poverty,” she tweeted after her vote. “Senators in both parties have shown support for raising the federal minimum wage and the Senate should hold an open debate and amendment process on raising the minimum wage.”

Restaurant workers’ tips complicate effort

It wasn’t just that some Democratic senators thought the COVID-19 bill was an inappropriate vehicle to pass a wage hike. Several said they opposed it because Sanders’ proposal would have eliminated the “tip credit” provision beneficial to restaurants and their workers who make the bulk of their pay off tips.

The tip credit, which is law in most states, allows employers to provide a much lower minimum wage to workers whose primary income is through tips, such as restaurant servers. Under the system, many workers often make more than the prevailing minimum wage and many employers benefit from a lower payroll.

Sen. Chris Coons of Delaware is concerned ending the provision “would likely curtail tipping to a large degree and could leave many restaurant workers with less take-home pay.” Maine Sen. Angus King, an independent who is a member of the Democratic Caucus, is worried doing away with the credit would burden restaurant owners who would have to make up the difference between their employees’ tips and a new $15 wage.

“Eliminating this system would be a heavy burden on employers (mostly restaurants, which are suffering anyway) and could end up hurting the very tipped employees we want to protect,” King said in a statement after his vote. 

New Hampshire Democratic Sen. Jeanne Shaheen, who also voted against the $15 wage, cited similar concerns. But one of her constituents said Shaheen ought to reconsider her stance.

The minimum wage in New Hampshire is $7.25. But as a waitress, Kimberly Taliadouros, 39, doesn’t make that even after tips. 

Kimberly Taliadouros makes roughly $3 an hour as a tipped worker.

Kimberly Taliadouros makes roughly $3 an hour as a tipped worker.
Kimberly Taliadouros

Because she is a tipped worker, the Manchester resident is guaranteed a little more than $3 an hour, which amounts to about $30,000 before taxes. The answer, she said, is raising the minimum wage to $15 for everyone.

“Rents are upwards of $1,500 a month,’’ she said. “Who can afford that on $7.25 an hour? Who can afford that on a tipped wage, during a pandemic, when you’re lucky if you get (to serve) eight tables in a day and you’re lucky if you walk out with fifty bucks?’’

Sen. Jeanne Shaheen, D-N.H., speaks during a hearing on Capitol Hill on March 25.

Sen. Jeanne Shaheen, D-N.H., speaks during a hearing on Capitol Hill on March 25.
Pool, Getty Images

Life has gotten better now that her husband landed a job as an engineer. But she still remembers a time when she had to rely on food stamps as a waitress. The constant struggle took an emotional toll.

“It’s hard to not be able to go out and have a reliable vehicle because you’re just broke,’’ she said. “It’s incredibly stressful to your mental health. You feel like less of a human … knowing you’re going to work 40 hours a week and making peanuts. It’s demoralizing. It definitely affects how you see yourself in the world.’’

‘People are only going to pay so much for a pizza’

In Maine, where the minimum wage stands among the nation’s highest at $12.15, the state Chamber of Commerce opposes a $15 federal standard.

“I think the minimum wage is (already) too high in Maine,” said Peter Gore, the chamber’s executive vice president.

While he believes the pay floor is excessive throughout the state, he says businesses in the more urban southern part of the state, which includes Portland, can better afford it. In those areas, the cost of living is higher, sales are robust, and restaurants and retailers must pay higher wages anyway to attract workers. Portland’s minimum wage is scheduled to rise to $15 an hour by early 2025.

More: The people of America say raise the minimum wage. Their leaders should listen.

But in the rest of the state, which is largely rural, “it’s a real struggle,” Gore says. “The economy isn’t as strong” and a big minimum wage jump would force restaurants or shop owners to reduce hours, cut employees or raise prices so sharply that they lose customers.

“People are only going to pay so much for a pizza or hamburger,” he says.

Some business owners, like Jim Wellehan, owner of Lamey Wellehan Shoes, a chain of six stores in Maine, supports a $15 minimum wage for the nation. Most of his 100 or so employees already earn at least that much. Bumping the rest up to $15 would deliver a “modest” hit to profits, but it would be worth it, he said.

Kathy and Jim Wellehan, co-owners of Lamey Wellehan Shoes

Kathy and Jim Wellehan, co-owners of Lamey Wellehan Shoes
Russ Dillingham

“It’s what we should be doing. We try to take care of our people,” said Wellehan whose company also has a 401(k) matching plan.

More: Minimum wage set to rise in 20 states, 32 localities as growing number adopt $15 an hour

Rebecca Hamilton, co-CEO of New Hampshire-based W.S. Badger Company, which makes skincare products, told a House Small Business subcommittee recently that paying her employees no less than $15 an hour has helped her small firm.

“This approach has enabled us to spend virtually zero dollars on recruitment while retaining an engaged and committed workforce for the past 25 years,” she told lawmakers. “By retaining experienced staff, we’ve seen increased productivity, less waste and fewer errors which is important in a manufacturing facility … The success of our business is directly tied to the dedication of our staff.”

GOP lawmakers support more modest steps

Some congressional Republicans have gotten behind a more modest increase in the minimum wage.

Republican Sens. Mitt Romney of Utah and Tom Cotton of Arkansas have teamed up on a bill to increase the wage to $10 – provided businesses are required to use the e-verify system that checks the legal status of their employees. That’s a no-go for many Democrats not just on the amount but also because they oppose the e-verify requirement.

Senator Tom Cotton (R-AR), left, Senator Mitt Romney (R-UT)

Senator Tom Cotton (R-AR), left, Senator Mitt Romney (R-UT)
AFP via Getty Images

Sen. Lindsey Graham, R-S.C., has floated a plan to raise the wage annually based on inflation increases, but many Democrats arguing for bold action view that as a meager gesture.

Republicans also don’t want Washington dictating to states what they should pay workers. And they are likelier to listen to business interests on what’s best for local economies.

Louisiana Republican Sen. John Kennedy compared a minimum wage increase to a “meat axe.”

“I think a scalpel at this juncture would be more appropriate,” he told Capitol Hill reporters. “And rather than put the burden on small businesses through a minimum wage increase to help low-income workers, I would like to see a debate about using the scalpel of an earned income tax credit and then looking for money in the budget to pay for it.”

Opponents of the mandatory $15 wage say the size of paychecks should be decided by market forces, not government edict.

More: Walmart raising pay for 425,000 workers starting March 13 after strong holiday sales amid COVID-19

Case in point: Walmart, which raised pay for 425,000 employees starting last month.

The nation’s largest employer announced the starting wages would move up to between $13 and $19 per hour for in-store employees and those working in its e-commerce operations. That move is expected to bring up average pay for those workers to about $15, according to the company.

A pandemic that’s made life harder
Jason Homan

Jason Homan
Handout

Before the COVID-19 pandemic, Jason Homan and his partner, Kristen, both worked part-time at a grocery store in Bath, Maine, with Kristen earning the minimum wage of $12.15 and Homan at $12.80.

He put in 25 to 30 hours a week while she clocked 12 hours so they could split caring for their four-year-old son and accommodate Homan’s health issue. Together, they brought in a total of about $500 a week – just enough to squeak by with the help of some savings, food stamps and government health care assistance. They almost never took vacations or dined out.

Then the pandemic struck.

Kristen became pregnant. They temporarily left their jobs to avoid putting their unborn child at risk . And then they had to replace their car. They got unemployment benefits but it wasn’t enough to cover their monthly and emergency costs while leaving adequate savings. Homan says even a $15 minimum wage falls short in Maine but it would help lift them out of their situation.

Until then, they’re sleeping in their living room while their two sons share the bedroom. They’re now on a waiting list for a two or three-bedroom government-subsidized apartment.

“There’s nothing we can afford (in the Bath area) without moving far from our families,” Homan says, noting a non-subsidized two-bedroom apartment would cost about $1,600 a month.

Some states adopt two-tier wage system

Nothing prevents Congress from exempting certain groups of workers from the minimum wage requirement. They already do when it comes to farm workers, seasonal employees, those who earn tips, and teenagers.

They could make allowances for small businesses who have less cash or to differentiate based on cost of living. Several states already do so:

  • Minnesota has a minimum wage of $10.08 but allows employers to only pay workers $8.21 if their annual revenues fall below $500,000.
  • Nevada sets an $8 minimum wage for workers who are provided health benefits through their jobs. If no benefits are offered, the wage must be at least $9.
  • New York mandates a minimum wage of $12.50 throughout most of the state but raises it for areas with a higher cost of living, such as $14 for Long Island and Westchester County, and $15 for New York City.

Montana Democratic Sen. Jon Tester voted against the $15 minimum wage after hearing from small businesses about how much it would hurt them. So he could support legislation that creates a two-tier system as some states already do for mom-and-pop operations.

“There could be an exception for that,” he said. “But then it gets bureaucratic.”

‘Prices are going to go up’

Manchin, the moderate Democratic senator, voted against raising the minimum wage to $15 an hour, even though his state is one of the poorest in the nation and data from the Economic Policy Institute shows such an increase would boost the pay of some 250,000 residents by about $4,000 a year.

An estimated 278,734 West Virginians – or about one in six – lived in poverty in 2019, one of the highest rates in the nation. And the Mountain State had the second lowest median household income among the 50 states.

While Democrats backed by labor unions in the state have historically focused on wages and other economic issues, their influence has waned as the coal industry shed jobs and union membership declined.

West Virginians are fairly moderate when it comes to economic issues, said Bill Franko, an associate professor of political science at West Virginia University. That’s given Manchin some cover during the minimum wage debate to talk about the need to protect jobs, Franko said.

“For him, it’s sort of like a hedge, thinking, ‘We’re a smaller population state. We’re a lower income state,'” he said about Manchin’s $11 dollar proposal. “And for a number of small businesses, it might be too much to raise it to $15.”

Cody Southerly, 22, a criminal justice major who attends West Virginia University’s Potomac State College in Keyser, makes $9.75 an hour in a part-time warehouse job. The Petersburg resident supports a modest increase in the minimum wage but worries a $15 mandated wage in West Virginia would not give workers a huge advantage.

“We’re a lower economic place and the cost of living here’s little to none,” he said. “If you bump it up to $15, everything in the area’s going to bump up. Prices are going to go up.”

TOP: Kay Hill, 19, a student at West Virginia’s Potomac State Campus in Keyser, said some businesses expect maximum effort even if they pay minimum wage. BOTTOM: Cody Southerly, 22, a student at West Virginia University’s Potomac State College, says raising the minimum wage will lead to higher prices.
TOP: Kay Hill, 19, a student at West Virginia’s Potomac State Campus in Keyser, said some businesses expect maximum effort even if they pay minimum wage. BOTTOM: Cody Southerly, 22, a student at West Virginia University’s Potomac State College, says raising the minimum wage will lead to higher prices.
LEFT: Kay Hill, 19, a student at West Virginia’s Potomac State Campus in Keyser, said some businesses expect maximum effort even if they pay minimum wage. RIGHT: Cody Southerly, 22, a student at West Virginia University’s Potomac State College, says raising the minimum wage will lead to higher prices.
LEDYARD KING, USA TODAY

Kay Hill, 19, a Potomac State freshman, agrees that higher wages will lead to higher costs, such as rent “because everyone has more money.”

But she also remembers the minimum wage job she had back home at Parkersburg where the business owner was very demanding.

“They expected us to do maximum work,” she said. “You can’t expect ‘above and beyond’ when you pay the minimum.”

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