Why $11.50 By 2016?

What Makes $11.50 The Right Number for DC? 

A:

Given the fair market rent for a two-bedroom apartment in DC is at least $1,400 a month, a worker allocating the recommended 30 percent of her paycheck to housing would need to earn at least $27 an hour—but that’s not how economists approach setting a reasonable minimum wage. DC’s current minimum wage is $8.25 an hour, one dollar above the federal minimum wage. 

 

Other local economic benchmarks are commonly used, such as setting a wage that would boost the earnings of the lowest 10 to 15 percent of workers.

 

A reasonable middle ground might be to boost between the lowest 10 and 15 percent. As shown in the chart below, 15 out of 100 DC workers earned $11.53 an hour or less in 2012. Adjusting for inflation, that 15 percent would get a boost if the wage went to $12.50 by 2016. The $11.50 wage by 2016 would likely help between 12 and 13 percent of workers.

Hourly wage distribution, Washington, DC, 2012, with projections through 2020
(Dollars per hour)
Percentile 2012 2013 2014 2015 2016 2017 2018 2019 2020
                   
5th 8.25 8.40 8.57 8.75 8.95 9.14 9.35 9.56 9.78
10th 10.00 10.18 10.38 10.61 10.85 11.08 11.33 11.59 11.86
15th 11.53 11.74 11.97 12.24 12.50 12.78 13.06 13.36 13.67
20th 13.00 13.23 13.50 13.80 14.10 14.41 14.73 15.07 15.41
50th 24.79 25.24 25.74 26.31 26.89 27.48 28.08 28.73 29.39
90th 61.39 62.50 63.74 65.15 66.58 68.05 69.54 71.14 72.78

Center for Economic and Policy Research analysis of Census data. Wages refer to workers living in DC. Inflation projections from CBO, CPI-U-RS.

 

This is lower than the percentage of workers across the U.S. who would benefit from the proposed increase to the federal minimum wage introduced in Congress, known as the Fair Minimum Wage Act of 2013. This bill would raise the minimum wage for 16 percent of workers in the U.S. by setting a $10.10 minimum wage by July 1, 2015.

 

Another approach taken by economists is to look at half of the average wage. As the chart above shows, that would be $12.40 in 2012, and $13.45 adjusting for inflation by 2016.

 

A worker earning $11.50 an hour would earn $24,000 a year — hardly enough to afford the median two-bedroom apartment but enough to make work pay a bit more. The DC Council should support a wage of at least $11.50 an hour by 2016 and index for inflation thereafter.

 

Or consider what the 1968 minimum wage of $1.60 would be if it had only been adjusted for inflation: In 2016, that wage would be about $11.40.

 

Each of these benchmarks points to $11.50 by 2016 as a reasonable wage increase.