by Kaitlin Tindol
The United States Department of Labor requires that employees be compensated at a federal minimum wage rate of $7.25 per hour.[1] The Department also mandates that employees who work a job where they are regularly tipped more than $30 dollars per month are only required to be compensated by their employers at a wage rate of $2.13 per hour.[2] This is known as the “tipped wage policy.” However, these long-standing traditions of adopting tip wage and the federal minimum wage are beginning to change in many places in response to the rising cost of living. Alabama is one of only 5 states in the United States that does not have state-specified minimum wage laws, along with Mississippi, Louisiana, South Carolina and Tennessee.[3] The people and economic conditions of Alabama could greatly benefit from following the trend of other states who are making adaptive changes in minimum wage, and therefore taking steps by which to ensure their working class earns a living wage.
Many states with high costs of living have begun to evaluate and adjust the minimum wage in response to these rising costs of living. These responses include relying upon economic indexes to adjust the minimum wage in response to the cost of living, such as the Consumer Price Index.[4] Alabama, like the rest of the country, has seen a rise in the cost of living over the 12 years since the last raise of the federal minimum wage, but has made no attempt to respond to this cost of living increase by adopting a higher state specified minimum wage.[5] Although the state of Alabama has yet to address the rise in cost of living, there has been a response from the City of Birmingham. In 2015, Birmingham proposed its own municipal minimum wage increase, but was quickly restricted by the state legislature from doing so. The action by the Birmingham City Council to raise their own municipality’s minimum wage was the city recognizing that minimum wage should be a livable wage.[6] The response of the Alabama legislature was largely a move that underscored for many people the minimal value placed upon those who work in low income jobs. The disproportionate increase in the federal minimum wage is affecting a stark number of Alabamians. As of 2013, 77,000 Alabamians were living off of wages at or below the federal minimum wage, and below the estimated cost of living wage for the state.[7]
Alabama, as one of the five states in the United States that without state-specific minimum wage laws, relies upon the federal law to dictate its minimum wages, including tip wage rates.[8] The practicality of low minimum wages in the state becomes problematic when considering statistics of those earning minimum wage both in Alabama and in places with higher costs of living. For example, the municipality of Birmingham has attempted to make an adjustment to their municipal minimum wage because of the higher cost of living in Birmingham’s urban setting, as compared to more rural areas of the state.[9] In February of 2016, the city council voted to increase the municipality’s minimum wage to $10.10 an hour, up from the federally adopted federal minimum wage of $7.25 an hour. While this vote was approved by the city council of Birmingham, Alabama’s state legislature quickly took action to ban state municipalities from setting their own minimum wages. [10] While this vote to raise the minimum wage of the residents of Birmingham would have greatly benefited the many low wage workers who live in the city and stimulated the Birmingham economy, it wouldn’t have actually done anything to help those reliant upon tipped wages, as the state of Alabama makes no distinction in the requirements of wages of tipped workers. [11]
Alabama, as well as the four other states that make no distinction as to their state level of minimum wages, are ignoring measures that could help to guarantee their state’s working class a livable wage. For example, in 2019 the National Employment Law Project reported that the rates of minimum wage will increase in over 19 states and 21 cities this year. [12] In 8 of the 19 states where minimum wage rates increased at the start of 2019, this was done in response to calculated Consumer Price Index cost of living rates. [13] For reference, the Consumer Price Index measure examines the cost of living by examining the weighted average of a basket of consumer goods and services such as the costs of transportation, food and medical care amongst other expenses. Minimum wages that adjust according to changes in the Consumer Price Index help provide a dynamic living wage for workers. Because of Alabama failing to adopt this policy, the state is failing to provide a livable wage for its citizens. If Alabama adjusted to adopt a livable, rather than federal, minimum wage, it would be more than $11 an hour considering the cost of living in Alabama. However, right now MIT research has established that Alabama’s minimum wage policy is placing minimum wage earners closer to poverty levels, than to livable wage levels. [14]
Sources:
[1] Federal Minimum Wage, elaws – employment laws assistance for workers and small businesses, https://webapps.dol.gov/elaws/whd/flsa/minwage.htm (last visited Jun 8, 2019).
[2] What is the minimum wage for workers who receive tips?, elaws – employment laws assistance for workers and small businesses, https://webapps.dol.gov/elaws/faq/esa/flsa/002.htm (last visited Jun 8, 2019).
[3] Minimum Wage for Tipped Employees, U.S. Department of Labor – Wage & Hour Divisions (WHD) – Minimum Wages for Tipped Employees, https://www.dol.gov/whd/state/tipped.htm#Alabama (last visited Jun 8, 2019).
[4] Raises from Coast to Coast in 2019, National Employment Law Project, https://www.nelp.org/publication/raises-coast-coast-2019/ (last visited Jun 8, 2019).
[5] Alabama Minimum Wage for 2018, 2019, Federal and State Minimum Wage Rates for 2019, https://www.minimum-wage.org/alabama (last visited Jun 8, 2019).
[6] Yuki Noguchi, In Battle Pitting Cities Vs. States Over Minimum Wage, Birmingham Scores A Win NPR (2018), https://www.npr.org/2018/07/27/632723920/in-battle-pitting-cities-vs-states-over-minimum-wage-birmingham-scores-a-win (last visited Jun 8, 2019).
[7] Minimum Wage Workers By State: 2013 Statistics Governing, https://www.governing.com/gov-data/economy-finance/minimum-wage-workers-by-state-statistics-2013-totals.html (last visited Jun 8, 2019).
[8] Minimum Wage for Tipped Employees, U.S. Department of Labor – Wage & Hour Divisions (WHD) – Minimum Wages for Tipped Employees, https://www.dol.gov/whd/state/tipped.htm#Alabama (last visited Jun 8, 2019).
[9] Yuki Noguchi, In Battle Pitting Cities Vs. States Over Minimum Wage, Birmingham Scores A Win NPR (2018), https://www.npr.org/2018/07/27/632723920/in-battle-pitting-cities-vs-states-over-minimum-wage-birmingham-scores-a-win (last visited Jun 8, 2019).
[10] Id.
[11] Alabama Minimum Wage for 2018, 2019, Federal and State Minimum Wage Rates for 2019, https://www.minimum-wage.org/alabama (last visited Jun 8, 2019).
[12] Raises from Coast to Coast in 2019, National Employment Law Project, https://www.nelp.org/publication/raises-coast-coast-2019/ (last visited Jun 8, 2019).
[13] Id.
[14] Living Wage Calculation for Alabama, Living Wage Calculator – Living Wage Calculation for Alabama, http://livingwage.mit.edu/states/01 (last visited Jun 8, 2019).