The U.S. “Real” Minimum Wage Is Actually Declining! – Here’s Why

Lorimer Wilson September 6, 2017 Comments Off on The U.S. “Real” Minimum Wage Is Actually Declining! – Here’s Why 1,904 Views

…What gets lost in the debate [as to whether or not] the U.S. federal minimum wage should be increased to $15 an hour is a basic understanding of how often Congress has raised the minimum wage in the past, and how the current rate of $7.25 stacks up against previous levels.

This article is an edited ([ ]) and revised (…) synopsis by munKNEE.com of an article by Raul of howmuch.net to ensure a faster & easier read. It may be re-posted as long as it includes a hyperlink back to this revised version to avoid copyright infringement.

…[To determine the real value of the minimum wage over time (1940 to 2017) we created the visualization below] to find out.

We plotted the federal minimum wage for every year since 1940 (the blue).
We then adjusted [it] for inflation to reflect how much purchasing power an hour’s work would be worth today (the green)…

The problem underlying the minimum wage debate is inflation.

…Low-wage workers could do the most with their paychecks in 1968, when they earned more than $10/hour in 2017 dollars. Congress passed a few adjustments in the 1990s and 2000s, but the wage is back to the same level it was in the 1980s.

What can be done about the slow erosion of the minimum wage?

Cities and states can pass their own minimum wage laws and, indeed, the majority (29) have higher minimums than the federal minimum, but most people work in places without a local ordinance.

States with the highest minimum wages include:

Washington ($11.00),
Massachusetts ($11.00),
California ($10.50),
Vermont ($10.00),
Arizona ($10.00),
and Connecticut ($10.00).
Washington, D.C. also has its minimum set at $11.50.

Here are the 29 states that have higher minimums, according to Bankrate.com:

Here are the upcoming schedules for the minimum wage increases in some major cities, including Los Angeles, Seattle, and New York City.

By 2025, the highly-debated Seattle minimum wage is anticipated to hit $18.00 for all types of businesses.

Here’s one way to solve the problem that appeals to both sides of the debate.

What if Congress indexed the minimum wage to inflation? If things cost 2% more next year, then the wage would increase 2%. Workers would benefit because their take-home pay would slowly rise, and businesses would benefit because raises would become predictable. That’s what we call a win-win.

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