Economic Snapshot | Wages, Incomes, and Wealth

The Minimum Wage Used To Be Enough To Keep Workers Out Of Poverty—It’s Not Anymore: Raising It to $10.10 Would Lift a Family of Three Above the Poverty Line

As President Obama and others have noted, a parent who works full-time, year round at the federal minimum wage does not earn an income above the federal poverty line.

This wasn’t always the case. Up until the early 1980s, an annual minimum-wage income—after adjusting for inflation—was enough to keep a family of two above the poverty line. At its high point in 1968, the minimum wage was high enough for a family of three to be above the poverty line with the earnings of a full-time minimum-wage worker, although it still fell short for a family of four. The falling minimum wage has led to poverty and inequality. Today, at the federal minimum wage of $7.25 per hour, working 40 hours per week, 52 weeks per year yields an annual income of only $15,080. As shown in the figure, this is below the federal poverty line for families of two or more.

If the federal minimum wage were raised to $10.10 per hour, as Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) have proposed (depicted by the dotted line), it would bring a minimum-wage income back above the poverty line for a family of three. The Harkin-Miller proposal would then index the minimum wage so that it is automatically increased for inflation each year, thereby preserving its real value and protecting full-time minimum-wage workers from falling into poverty.

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See more work by David Cooper