The pandemic has made one thing absolutely clear, the need to raise the minimum wage. Like many I was disappointed by its exclusion from the relief bill, but I was not surprised. The simple fact is that the parliamentarian was right about it having no bearing on national spending (downstream effects notwithstanding). Unfortunately, our razor thin majority gives Manchin and Sinema way too much power and forces us to negotiate.
While I agree with Manchin’s argument about some areas not needing as high wages, I do not support the idea that $11 or $12 is enough for everywhere. I am not entirely sure who said that it should vary by area, but it is a valid point. Luckily there is already an organization that has figured that out.
The U.S. government already adjusts salaries by area in relation to the cost of living. Managed by OPM (Office of Personnel Management), the GS pay scale takes location into account when it comes to salary. Applying the locality adjustment to the national wage would be an alternative to simply setting it at $15 everywhere.
While we would still need to raise the base wage and get rid of the tipped wage, youth wage, and 14c loopholes, it would possibly be more politically safe for the moderates afraid of losing their seats. For the record the 14c loophole allows employers to pay “disabled” employees as little as 25 CENTS per hour (Insert outrage here).
Below are screenshots of a spreadsheet that I put together using the locality adjustments with several different base wages. Locality adjustments are sorted descending. The key is to look at the effective minimum that results.
The GS locality adjustments are public record, but I prefer to use federalpay.org. They have a very convenient county by county breakdown of the locality adjustments.
While some may feel that some wages that result are not enough, it is still significantly better than before. One nice thing about this that may appeal to the moderates is the ass-cover it provides. If challenged on the high minimum it creates, they can point the finger to “those OPM idiots”. They shouldn't but they can.
One of the big “arguments” is the CBO report that says raising the wage will cost jobs, but it does not consider that if people have more money to spend they will do it locally. People prefer to spend money locally but if they can't afford to they won't. As for the business that say, “we can't afford it”, if you can only exist by paying poverty wages your business model is not viable.
An often overlooked benefit of the increased wage is the downstream wage increases. Imagine you are working at a middle wage and you see the minimum wage employees get a raise, are you going to standby and not demand an increase? If not the company would risk losing employees to a company that does bump up the salaries. This would serve to increase the wages of most employees in this country.
As for the phase-in of such a plan, it could start with just adding on the locality adjustment at first. Such a process would raise the effective minimum wage to between $8.40 and $10.25 immediately. In the bigger areas that have higher locality adjustments a stepping approach might be warranted. But these areas are already large urban areas which are easily capable of a drastic increase or have higher wages already.
From there the base wage would increase by $1 per year until it reaches the national base amount. Keep in mind, because the effective wage is expressed as a percent the effective wage would increase at a rate of more than $1 per year.
Once the base is reached, it would be tied to inflation. The effective wage would change every year as OPM updates the adjustments. Such a system of different wages would likely be confusing to some, so the government would have to setup an easy to use website to provide information on the wages across the country. Something simple like wage.gov which would simply ask for your county and tell you the effective wage there.
All in all, a system like this might be the only thing would could get through the senate. Wether by nuking the filibuster and using the moderates, or by tricking some republicans who don't know anything about locality adjustments.