Skip to content

Statement of Senator Tom Harkin (D-IA) At the HELP Committee Hearing: “Keeping up with a Changing Economy: Indexing the Minimum Wage”


*As Prepared for Delivery*

“For several years now I have held hearings focusing on the need to bolster the middle class in this country and restore the American Dream.  The American Dream is supposed to be about building a better life.  If you work hard and play by the rules, you should be able to support your family, join the middle class, and build a brighter future for your children. 

“But today, tens of millions of hardworking Americans who are earning at or near the minimum wage can’t even aspire to live a middle class life or achieve the American Dream. Instead, they are falling further and further behind.  We need to do more to support these workers as they try to build opportunity for their families and their futures.  A critical first step is to ensure that they earn a fair day’s pay for a hard day’s work.  That is why last week I joined with Congressman George Miller to introduce the Fair Minimum Wage Act of 2013, which would provide a long-overdue increase in the federal minimum wage. 

“This bill will gradually increase the minimum wage to $10.10 an hour in three annual steps, and then link future increases in the minimum wage to the cost of living, so that people who are trying to get ahead don’t fall behind as our economy grows. 

“Today’s hearing will focus specifically on indexing the minimum wage.  This is the first hearing in this Committee to look at indexing the minimum wage in more than twenty years. 

Over the past four decades, Congress has raised the minimum wage five times.  But these raises have come sporadically and after long stretches with no raise.  The subsequent increases have not brought the wage up to its past levels, and so the real value of the wage has declined significantly.  The minimum wage in fact is worth 31 percent less than at its peak in 1968, even as productivity has soared. 

“This means that as the economy has grown and corporate profits are at an all-time high, tens of millions of low-wage workers and their families have almost a third less buying power than 45 years ago.  If the minimum wage had kept pace with inflation since 1968, today it would be $10.56 and a full-time worker would earn nearly $22,000.  Instead, the minimum wage is $7.25 and a full-time worker earns only $15,000 a year.  It is a poverty wage. 

“This has seriously hurt the standard of living for low-wage workers and their families.  As a result, many low-wage families are forced to rely on safety net programs like food stamps and housing assistance to ensure that they can survive.  And when millions of workers are barely surviving because of low wages, they cannot hope to join the middle class.  This ends up hurting everyone, especially our economy. 

“The middle class is the backbone of our economy, and we must grow our middle class in order to have a growing economy in the long run.  Businesses need customers to buy things if they want to grow and prosper.  But when workers earn a poverty wage and have no purchasing power, they can’t help the economy thrive.  That’s one reason why so many businesses large and small – from the CEO of Costco to the record store owner we will hear from today – support a higher minimum wage, and support indexing the minimum wage  to inflation so that it will no longer lose value.

“We stand at a rare moment of opportunity—where we can do what is right for the economy, and at the same time, do what is simply right.  A fair minimum wage that is predictable, with modest increases that keep wages steadily growing in pace with inflation, rather than falling behind, benefits everyone.  Indexing will do all of these things.  That is why 10 states have already implemented this policy, and we will hear from one of them today.  At the federal level, this policy is long overdue.

“Of course, indexing the minimum wage must be done right.  We have to be sure to set an adequate minimum wage in the first place, before locking it in in real terms for the indefinite future.  That is why my legislation would first increase the minimum wage to $10.10 an hour, phased in through three increases spread out over three years.

“Once we make sure that the minimum wage is an adequate wage, indexing means that American workers will be able to count on fair wages in the future.   No longer will low-wage workers go years without even a penny raise.  When groceries get more expensive or the gas or electric bills go up, when the bus fare climbs again or the rent goes up—these workers, who typically must live paycheck-to-paycheck, will have the assurance that they have a raise coming to them.  Indexing the minimum wage, then, not only helps working families keep up with the economy and deal with rising costs, it also gives them peace of mind. 

“I want to thank our witnesses for being here today, and I look forward to an informative discussion of this critically important issue.”

###