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Study: Today's Minimum Wage Would be $18.85 if Tied to Productivity

If the federal minimum wage had grown at the same pace as worker productivity, it would be nearly $19 an hour in 2016. (Economic Policy Institute)
If the federal minimum wage had grown at the same pace as worker productivity, it would be nearly $19 an hour in 2016. (Economic Policy Institute)
August 2, 2016

CHEYENNE, Wyo. - This summer marks the seven-year anniversary of the last time the federal minimum wage was raised, from $6.55 to $7.25 an hour, and the buying power of those dollars has fallen by 10 percent because of inflation, according to new analysis from the Economic Policy Institute.

David Cooper, the senior economic analyst at the Economic Policy Institute, and the study's author, said until the 1960s, the wage was raised at roughly the same pace as increases in worker productivity.

"Had that trend continued since 1968 and we had continued to raise the minimum wage pretty regularly every year, we would have a minimum wage today of close to $19 an hour," he said.

The Democratic Party recently added a $15-an-hour minimum wage to its platform, and Donald Trump has also come out in favor of an increase. According to the National Federation of Independent Business, raising the federal wage isn't possible for all businesses, especially in the South and parts of the Midwest.

Cooper's study also found that if the wage had kept pace with the average growth of typical U.S. workers' income, today's minimum wage would be almost $12 an hour. Groups opposing a ballot initiative in neighboring Colorado to pay workers at least that amount by 2020 claim the move could cost the state 90,000 jobs. Cooper disagreed.

"The effect of increases the minimum wage on employment is probably the most studied topic in all of labor economics," he added. "Modest increases in the minimum wage have little to no effect on employment, I mean, that debate is basically settled."

Cooper said raising the wage floor also helps middle-class workers get paid more, and has a positive impact on local economies.

"Low-wage workers tend to spend every single dollar that they receive, because they have to just in order to make ends meet," he explained. "So if you raise the minimum wage, you're transferring income to folks who are going to go out and spend it right away. That can mean more customers coming through the door for most businesses."

Eric Galatas, Public News Service - WY