The minimum wage has not been adjusted appropriately for inflation over the last several decades, while core expenses such as housing and health care have increased significantly. As a result, minimum wage workers do not make a living wage. Social Security Works just issued a report that explains why increasing the minimum wage to $15 an hour provides greater economic security to workers and their families both today and over the long-term in the form of higher Social Security benefits.
The report finds that a $15 minimum wage will increase Social Security benefits for workers by as much as $5,000 a year. At the current minimum wage, Social Security monthly benefits are $979.80 for people at their full retirement age and $685.80 if they retire at 62.
At a $15 an hour minimum wage, the monthly benefit would be $1,409.60. Each additional dollar in wages increases a worker’s Social Security benefits. Today, 1.7 million workers earn the $7.25 an hour minimum wage, and tens of millions of additional workers earn less than $15 an hour.
The Economic Policy Institute found that a $15 an hour minimum wage beginning in 2025 would help 32 million workers directly or indirectly. Collectively, they would earn an additional $107 billion a year. Additional Social Security contributions would total 6.2 percent of that $107 billion.
And, there’s more. Once the minimum wage increases, overall wages across the nation also increase. Consequently, the Social Security Trust Fund benefits even more. In addition, retirement security improves with an increase in the minimum wage, helping retirees who too often do not have retirement savings or traditional pensions.
Increasing the minimum wage also helps older workers, women and people of color. About one in six older workers are paid the minimum wage; one in four older adults rely on Social Security for most all of their income. Women represent 59 percent of the population benefiting from an increase in the minimum wage, although women make up 50 percent of the workforce. More than three in ten Black Americans would benefit from the increase, although they make up 13 percent of the workforce.
About one in eight older adults live in poverty today. More than four in ten older adults have incomes under 200 percent of the Supplemental Poverty Measure. The numbers are projected to go up.
In sum, increasing the minimum wage is a much-needed reform that voters overwhelmingly support and that would benefit a large swath of the population and their families. The House COVID-19 relief bill included this increase. However, because the Senate Parliamentarian ruled that increasing the minimum wage is not directly related to the budget and should not be part of a budget reconciliation bill, it is no longer in the Senate relief bill. The Senate has the power to ignore the Parliamentarian’s ruling or to replace the Parliamentarian. But, Majority Leader Schumer doesn’t have the desire, it appears. Nor does President Biden. What will it take for a Democratic Congress and president to increase the minimum wage?
Here’s more from Just Care:
- All Americans should contribute at the same rate to Social Security
- Biden administration acts to ensure people with disabilities keep their Social Security benefits
- Social Security: Always there for you in a crisis
- Well-kept secrets of Medicare Advantage plans
- Medicare pays more than twice as much as the VA for drugs
