Reports from the Economic Front

a blog by Marty Hart-Landsberg

Increase The Minimum Wage

The federal minimum wage is $7.25 an hour.  Several states mandate a higher minimum wage; the state of Washington has the highest, at $9.19.

President Obama recently voiced his support for efforts to increase the minimum wage to $10.10.  The federal minimum wage was last raised in 2009 and certainly needs to be increased again.  The fact is that the federal minimum wage has not kept up with inflation.

As the New York Times graphic below shows, the current minimum wage is, when adjusted for inflation, 32% below what it was in 1968.  It is 8% below what it was in 2010.  In other words, those earning the minimum wage are suffering a real decline in income.

nyt-minwage-infographic

As for the appropriate value, why not $22.62?  That, as the graphic illustrates, is what the minimum wage would be if it grew at the same rate as the income of the top 1%. As Alan Pyke explains:

[Such a large increase] may seem outlandish, but previous research indicates American workers have just about earned it. Worker productivity has more than doubled since 1968, and if the minimum wage had kept pace with productivity gains it would have been $21.72 last year. From 2000 to 2012 alone workers boosted their productivity by 25 percent yet saw their earnings fall rather than rise, leading some economists to label the early 21st century a lost decade for American workers.

Looked at from that perspective the current movement for a $15 hourly wage at fast food restaurants sounds reasonable.  

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: