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.
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% |
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.
