The minimum wage is not worth nearly as much as it was decades ago. The Figure, from EPI’s forthcoming State of Working America Web site, shows the inflation-adjusted value of the minimum wage since 1960, in 2009 dollars. When adjusted for inflation, the minimum wage was worth $8.54 per hour in 1968, compared to the current minimum wage of $7.25 per hour. Based on a typical, 2,000-hour work year, the 1968 inflation-adjusted minimum wage would equate to an annual salary of $17,080 per year, versus $14,500 for today’s minimum wage. (The Figure shows a 2009 minimum wage of $6.84 because the minimum wage was increased in the middle of that year.)
Although each legislated increase in the minimum wage has served to increase its value, the Figure shows these increases have generally been short-lived, with inflation naturally eroding its purchasing power over time. As a result, the current value of the minimum wage is well below its historic peak in the late 1960s. EPI’s 2009 paper Fix It and Forget It notes that increasing the minimum wage stimulates the economy by giving workers more spending power. It proposes amending the minimum wage law to guarantee a consistent wage standard that will ensure that it keeps up with inflation and overall wage growth.
EPI’s latest edition of The State of Working America will be published online in January.