It's Time for a Minimum Wage That's Linked to the Poverty Rate

This week in many cities across the U.S., fast food workers are striking for higher wages.  They argue that the federal minimum wage of $7.25 is too low to live on.  If you believe in the poverty rate as a guide to the value of work, this is true.  The U.S. Department of Health and Human Services documents the poverty rate for a family of four in 2013 to be $23,550, roughly $11.50 / hour.  Even if you take the more conservative approach that every full time working employee should be able to support themselves and one other person rather than a family of four, the guideline of $15,510 amounts to $7.75. 

Clearly, it is time to raise the rate, and rather than having these battles every few years, the minimum wage should be linked to the poverty guidelines published by HHS, and every state should adopt the federal minimum standard or higher (states are "required" to meet the federal minimum but some (states shaded red in Figure 2) have no law with which citizens can file a complaint making the federal wage moot).  Some have recommended tying the minimum wage to inflation.  Either way, it should be a sliding scale rather than a battle that's waged in congress every 5-10 years.

It is pointless to have a minimum wage that doesn't keep working people above poverty, and it is pointless to have a poverty rate if it dictates no policy.  It is time to bring the two together.

Figure 1

2013 POVERTY GUIDELINES FOR THE 48 CONTIGUOUS STATESAND THE DISTRICT OF COLUMBIA

Persons in family/household	Poverty guideline
For families/households with more than 8 persons, add $4,020 for each additional person.
1	$11,490
2	15,510
3	19,530
4	23,550
5	27,570
6	31,590
7	35,610
8	39,630

Figure 2