When you look at the minimum wage over time and view it in terms of today’s dollars to account for inflation, you find that while all other indicators of income have increased, the minimum wage …
When you look at the minimum wage over time and view it in terms of today’s dollars to account for inflation, you find that while all other indicators of income have increased, the minimum wage has decreased significantly. In this letter all references to wages and income are in today’s dollars.
In 1962, inflation was low, and the minimum wage was $9.95 and 74 percent of the median individual income (MII) of $26,726. It peaked in 1970 at $13.34 and 84 percent of MII. Robust GDP rates in the 1970s along with double-digit inflation in the late ‘70s caused the major recession, resulting in a minimum wage of $9.74 and 59 percent of MII by 1980.
Nothing was done to address the minimum wage until 1990 and 1991 when it was set at $8.08, 47 percent of MII. After some levels of protection, it was ignored from 1997 to 2007 until increases to 2009 took it from 38 percent to 47 percent of MII. Then the housing market crash occurred and there have been no increases since 2009. Today the minimum wage of $7.25 is at 33 percent of MII.
Since 1962 the increase of the median individual income has grown by 64 percent, the top 10 percent by 92 percent and the top 5 percent by 105 percent. The minimum wage has decreased by 27 percent.
In the ‘60s a family with a single minimum-wage breadwinner, if frugal, could possibly buy a home. By the ‘70s and ‘80s, it would take two people. Today two people with two children working at minimum wage are $2,800 above the poverty level of $26,200.
It is hard to imagine anyone who is under today’s median income of $43,894 reaching that goal. A $15 minimum wage would take us back to the 1980’s 59 percent of MII.