We haven't raised the federal minimum wage in 9 years. Now is the time

• Despite a tightening labor market, wage growth has been below the inflation rate.
• Meanwhile, only 4 percent of U.S. workers received a pay raise due to the GOP tax cut despite promises that the average family would see a $4,000 annual increase.
• Raising the federal minimum wage would be a much more effective way to help millions of workers and level the playing field for those companies that have stepped up to pay higher wages.

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Protesters rally against Labor nominee Andrew Puzder in the lobby of Hardee's Headquarters on February 13, 2017 in St Louis, Missouri.

More than eight years removed from the depths of the Great Recession, the U.S. economy seems to be firing on all cylinders. Monthly jobs gains have averaged 200,000 over the past year, and the unemployment rate remains low at 4 percent. Yet, every month when the latest employment data is released, there’s one vexing issue: wages.

Despite a tightening labor market, wage growth has been stagnant. Wages are growing at an annual rate of 2.7 percent, which seems encouraging until you consider that the inflation rate is 2.9 percent. That’s why far too many Americans feel like they’re treading water. Their paychecks are unchanged, while everyday costs like housing, health care and gas have gone up.

But there’s an easy way to improve the lives of millions of Americans: raise the federal minimum wage.

This week marks the ninth anniversary of the last time the federal minimum wage was raised on July 24, 2009. It currently stands at $7.25 an hour. Since this federal standard was first enacted in 1938, it’s been raised 28 times under both Democratic and Republican presidents.

When I served as President Obama’s Deputy Secretary of Labor, my office displayed a government poster from 1950, when the minimum wage was lifted to 75 cents an hour under by President Truman. While that figure seems remarkably low by modern standards, 75 cents went a lot further in 1950 than $7.25 does today. In fact, the buying power of the federal minimum wage is well below its peak in the late 1960s.

At the current federal level, a full-time worker would earn just $15,080 a year. The negative results of low wages include declining living standards, growing income inequality, poorer health outcomes, greater reliance on government assistance, and reduced consumer spending.

States fill the void

In the absence of federal action, states and local governments have stepped in to the fill the void. Right now, 29 states and the District of Columbia have a higher minimum wage than the federal standard. And earlier this month, several states and large cities like Chicago, Los Angeles and San Francisco took additional steps to raise their wage levels. However, millions of workers – many in Southern states – are trying to make ends meet on $7.25 an hour or just barely above that.

At a time when companies are flush with cash from last year’s tax cut, there’s no better time to raise the federal minimum wage. The old canard that higher wages depress job creation has been disproven by evidence that states raising their minimum wages have higher job growth. In fact, employers around the country agree that higher wages are good for the bottom line.

That’s certainly the experience of Badger in Gilsum, New Hampshire, a 100-person company that makes organic skin products like Badger Balm. Co-Owner Rebecca Hamilton thinks the federal minimum wage is “ridiculously low,” so the lowest wage at her company is $15 an hour, more than double the $7.25 minimum wage in New Hampshire. Hamilton explains: “Anytime you can make an employee feel well-treated and happy, they’re going be a better employee, and it’s easier to find employees to work for you.”

Another company that understands the value of higher wages is BA Auto Care in Columbia, Maryland. Owner Brian England supports raising the state’s minimum wage to $15 an hour because he says better wages and benefits lead to more productive employees, longer tenures, and higher quality service.

Companies like BA Auto Care and Badger have joined with groups like Business for a Fair Minimum Wage to advocate for higher federal and state wage floors. Instead of listening to these business voices – or the overwhelming majority of Americans who favor a higher minimum wage – the Trump Administration is intent on pushing for another trickle-down tax cut.

Last year, during the push for the $1.5 trillion tax cut package, both the President and GOP congressional leaders promised that the tax cuts would lead to a $4,000 pay raise for the average family. The reality has been far different. Only 4 percent of U.S. workers received a pay raise due to the tax cut, and most of those raises were in one-time bonuses instead of permanent raises. Meanwhile, corporations spent 88 times more on stock buybacks as they did on pay raises for workers.

Raising the federal minimum wage would be a much more effective way to help millions of workers and level the playing field for those companies that have stepped up to pay higher wages. After nine long years, it’s long past time for the White House and Congress to act. American workers shouldn’t have to depend on the generosity or geography of their employer in order to make ends meet.

Chris Lu served as Deputy Secretary of Labor during the Obama Administration. He is now a senior fellow at the University of Virginia Miller Center and a board member of the American Sustainable Business Council.