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The history and future of the minimum wage

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Snapshot for March 15, 2000

The history and future of the minimum wage

Discussion in Congress is again underway over proposals to increase the federal minimum wage from its current level of $5.15 to $6.15. The House of Representatives has recently approved an increase in the minimum wage to $6.15 that would be phased in by 2001, while the Senate has approved an increase to the same level, but with a longer, three-year phase-in period ending in 2002.

The figure below shows the inflation-adjusted minimum wage from 1955-2003 (projected). The minimum wage suffered a sharp decline in value over the 1980s, when Congress failed to adjust the wage floor for nine years. Recent increases in the 1990s have helped ameliorate some of this decline, but the inflation-adjusted minimum is still worth 21% less today than in 1979.

Figure 1

The lines at the end of the figure show the impact of the new proposals. Without another increase, the real value of the minimum wage would fall to $4.67 (1999 dollars) by the year 2003 (according to inflation projections by the Congressional Budget Office). By 2003, the proposed increases would restore the wage floor to slightly above its 1983 level, still leaving it 15% below its 1979 peak.

Workers would initially see larger gains under the House of Representatives two-year plan. A full-time, year-round worker would gain an additional $1,000 over the course of three years under this plan, as opposed to the three-year proposal approved in the Senate. By 2003, the Senate’s proposal “catches up” to that of the House, leaving the minimum wage at $6.15 under both plans.

For a more detailed analysis of the current minimum wage legislation being considered in Congress, see the EPI Issue Briefs, Unbalanced Acts and The Next Step, both released on March 8, 2000.

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