Economic Snapshot | Wages, Incomes, and Wealth

Raising the Minimum Wage to $12 by 2020 Would Shrink the Wage Gap between Low-Wage Workers and Typical Workers

Over the past four decades, much of the growth in inequality has come from the declining value of the federal minimum wage. Infrequent or inadequate increases in the federal wage floor created a significant gap between the hourly wages paid to low-wage workers and the wages paid to typical or middle-wage workers. The Raise the Wage Act of 2015, recently introduced by Sen. Patty Murray (D-WA) and Rep. Robert “Bobby” Scott (D-VA), would help undo this growth in wage inequality by gradually raising the minimum wage to $12 by 2020. As explained in We Can Afford a $12 Federal Minimum Wage in 2020, this would restore the relationship between the minimum wage and the wages of typical workers that existed in the late 1960s.

As the figure below shows, at its high point in 1968, the federal minimum wage was equal to 52.1 percent of the median wage of full-time workers in the United States. As of 2014, the minimum wage had fallen to 37 percent of the median wage. If the federal minimum wage is raised to $12 by 2020, it would equal 54.1 percent of the median wage, under the conservative assumption that the median wage will not grow any faster than inflation between now and 2020. If, instead, the median wage grows just 0.5 percent per year faster than inflation between 2014 and 2020, a $12 federal minimum wage in 2020 would equal 49.9 percent of the 2020 median wage.

Economic Snapshot

Raising the Minimum Wage to $12 by 2020 Would Shrink the Wage Gap between Low-Wage Workers and Typical Workers: Federal minimum wage as a share of the national median wage, 1968–2014 (actual) and 2015–2020 (projected)

Minimum wage as a percentage of the median wage Minimum wage as a percentage of the median wage (projected)
1968 52.1%
1969 47.9%
1970 44.9%
1971 43.4%
1972 41.1%
1973 38.1%
1974 43.7%
1975 42.8%
1976 44.3%
1977 41.6%
1978 45.0%
1979 45.9%
1980 45.0%
1981 45.0%
1982 42.1%
1983 40.4%
1984 38.5%
1985 36.6%
1986 35.5%
1987 34.7%
1988 33.3%
1989 32.0%
1990 35.1%
1991 37.9%
1992 36.3%
1993 36.1%
1994 35.4%
1995 34.9%
1996 37.9%
1997 39.1%
1998 37.6%
1999 36.1%
2000 35.2%
2001 33.8%
2002 32.9%
2003 32.1%
2004 31.2%
2005 30.6%
2006 29.9%
2007 32.9%
2008 35.2%
2009 38.4%
2010 38.2%
2011 38.1%
2012 37.9%
2013 37.7%
2014 37.0%
2015 36.6% 36.6%
2016 39.6%
2017 43.5%
2018 47.2%
2019 50.8%
2020 54.1%
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Note: Projections over 2015–2020 assume the minimum wage is gradually raised to $12.00 by 2020 as stipulated by the Raise the Wage Act of 2015. See data appendix for methodology.

Source: Reproduced from David Cooper, John Schmitt, and Lawrence Mishel, We Can Afford a $12 Federal Minimum Wage by 2020, Economic Policy Institute Briefing Paper #398. For a more detailed explanation of data sources and computations, see the appendix of this paper.

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