FORT WAYNE, Ind. (WANE) — For years, politicians and workers have debated over whether the minimum wage should be increased. With the COVID-19 pandemic and the worker shortage, many companies are increasing their wages to attract employees.
However, Purdue University Fort Wayne professor of organizational leadership Michael Kirchner says there needs to be a conversation about minimum wage and a liveable wage.
“We spend so much time using these terms interchangeably and that’s a starting point for us to take a step back,” Kirchner said. “We need to make distinctions between these terms.”
The minimum wage is the wage mandated by law, to keep employees above the poverty level in their area. In the state of Indiana, the minimum wage is $7.25. However, Kirchner says the minimum wage and the liveable wage are not the same.
A liveable wage is a socially acceptable level of income that adequately covers basic needs like food and shelter. Kirchner says that the state’s current minimum wage does not provide a person with the means to live.
The minimum wage was created by Congress under the Fair Labor Standards Act in 1938. Between the 30s and 60s, the minimum wages increased with inflation and productivity, but the increases stalled. Then in 2009, the federal minimum wage increased to its current rate of $7.25 an hour.
Over the past decade, lawmakers and workers have pushed to increase the minimum wage to no avail. In 2021, Indiana Democrats called for an increase to Indiana’s minimum wage that would have boosted Indiana’s to $10 an hour beginning in 2022 than in $1 stages until it reaches $15. That plan was shot down.
Now the nation is now at its longest stretch without a raise in the wage and Kirchner says that needs to change.
“When we hear arguments about the minimum wage should be $22, $24 dollars an hour that’s what we are talking about,” Kirchner said. “The amount the work they are able to produce in any given period of time is greater than what it used to be in back in the 30s, 40s, 50s, 60s.
A liveable wage back then was taking a person’s food expenses and times it by three that established the poverty line. The problem is those other items like transportation, housing, health care and child care weren’t accounted for.
But late in the 60s and ever since we stopped increasing wages based off of productivity of our workforce and how do we take care of our workforce that is producing way more than they did in the past.”
Finding a company that is still paying $7.25 is difficult. A majority of companies like McDonald’s, Chipotle, Arby’s, and Taco Bell are raising their wages and offering incentives to fill job openings. With unemployment numbers close to pre-COVID levels and more jobs expected to be created many experts are debating whether there’s a labor shortage or a wage shortage.
“There’s this recognition that one of the things we have to do is start offering a more competitive salary, start offering wages that are going to be competitive in the market,” Kirchner said. “$7.25 is not anywhere close to a liveable wage.”
But what is a liveable wage for Hoosiers living in Fort Wayne? Kirchner says he and other professionals have been using the Living Wage Calculator created by the Massachusetts Institute of Technology to show what a liveable wage is.
Kirchner says the data indicates that in Indiana a liveable wage for a two-parent, two-child household with one income is between $60,000 to $65,000. That is $30 dollars an hour assuming you are working 40 hours a week. A single-person household needs to make at least $50,000 dollars.
The current minimum wage of $7.25 would make a person $15,000 a year. With an increase to $15 an hour, a person will see their income increase to $30,000 a year. That is still not enough to live on according to the Living Wage Calculator.
At a recent Fort Wayne City Council meeting, council members discussed the shortage of paramedics and EMTs at the Three Rivers Ambulance Authority. Currently, EMTs make a little over $14 dollars an hour which is less than employees at Costco, Chipotle, and other big named companies. So who should make more?
“This is a consequence of keeping minimum wage and those wages for lower-paying jobs low and then nearly doubling or more their pay,” Kirchner said. “Those corresponding raises are not happening in other positions. One of the issues for making a dramatic increase from $7.25 to $15 is what happens to those employees who have that skill set or knowledge that are desirable.”
Kirchner says there’s a tension between low unemployment rates and businesses having several open positions they need to fill. This he says will cause a breaking point that will drive wage growth and will eventually lead to those with desirable skills, like EMTs to see an increase.