Minimum Wage, Factoring for Inflation, is Lower than in 1956

Friday, March 15, 2013
Federal Minimum Wage 1968-2012 (graphic: NELP)

Washington has increased the federal minimum wage more than 20 times since it was created during the Great Depression. But those bumps have not been sufficient to keep the wage law current with inflation.

 

As a result, today’s minimum wage of $7.25 (set in 2009) is actually lower than it was in 1956, after factoring in rising prices over the decades, according to a recent report from the Congressional Research Service (CRS).

 

Fifty-seven years ago, the minimum wage was officially $1/hour. But its “real value” based on 2013 dollars would have been $8.39.

 

When the same thing conversion is made for the current wage of $7.25, its real value is only $7.80.

 

“Because there have been some extended periods between these adjustments while inflation generally has increased, the real value (purchasing power) of the minimum wage has decreased substantially over time,” the report states.

 

The minimum wage was established by the Fair Labor Standards Act of 1938, and was first set at 25 cents. Since then, it has been raised 22 separate times.

 

It reached its peak value in real terms in 1968, when the official rate of $1.60 was worth the equivalent of $10.57 today.

 

The CRS says that in order for the current minimum wage to equal the wage of 1968’s purchasing power, Congress would have to order a 26% increase, which would amount to adding another $2.77 an hour.

-Noel Brinkerhoff

 

To Learn More:

Inflation and the Real Minimum Wage: A Fact Sheet (by Craig K. Elwell and Linda Levine, Congressional Research Service)

Economy Recovers for Richest 1%; Income Flat for the other 99% (by Matt Bewig, AllGov)

Minimum Wage for Tipped Workers Hasn’t Changed in More Than 20 Years (by Noel Brinkerhoff, AllGov)

Comments

larry R. 4 years ago
I don't get to fancy with this stuff I look at the minium wage 1956 - 1$ and a movie ticket .50 cents so we only had to work 30 minutes to go to the movies now over 2 hours how the hell can the government say we are doing ok.
Gary 5 years ago
What does "When the same thing conversion is made for the current wage of $7.25, its real value is only $7.80." mean?
anonymouse 6 years ago
Note too that 57 years ago, a pharmacist made $5/hr, or 5 times the minimum wage; a city bus driver (in Texas) made something over $4/hr. This is equivalent to $35/hr and $28/hr, respectively, which is how people working those jobs could support a family on one income in those days. While the erosion of the minimum wage is bad, the state of the middle class is, if possible, even worse: jobs which once paid a decent living wage now pay simply a living wage. (The minimum wage meanwhile cannot be said to be a living wage at all.) Where did the prosperity go? It went to pay for Vietnam, Reagonomics, Iraq and Afghanistan, TARP, and myriad other imperial misadventures.

Leave a comment