Sunday, November 27, 2011

Minimum Wage in Real Value 1938-2010

Susan Brannon
26 November 2011

Did you know that the U.S. minimum wage in real dollars had been going down in relation to inflation?  This is one reason why it now takes two or three jobs per household to keep above water.  In 1938 the the minimum wage was $0.25 / per hour to 2010 of $7.25.  If we adjust the wages to 2010 dollars this shows the real value of minimum wage.  In 1968, the minimum wage in real dollars was equal to $10.04 per/hour.  That is quite a drop from todays wages.
Real Value Minimum Wage Red Squares - Nominal Value Blue Dots . Graph by OSU 2010
Even if you take the states that ventured away from the Federal minimum wage amounts, with the highest being in Washington for January 1, 2012 to $9.04 per/hour, that is still a drop from 1968.  No wonder the 60's were remembered as the good times.

If that is not enough for reality, if we take the Real Annual Wage since 1938 and compare that to the real poverty level for a family of four, not once has the required Federal minimum wage levels kept any family above the poverty line.  Minimum wage varied from a maximum of 90% of the poverty level in 1968, and has averaged two thirds of the poverty level since 1959, when the poverty level was established.  In 2006 the minimum wage level was raised for the first time in ten years without any adjustment.
Real Annual Income Wage /Poverty Line; Graph OSU
The reality is that as the real value of minimum wage has declined, so has the percent of workers that it covered.  Now over 130 cities survive on "living wages".

A living wage is the minimum hourly income necessary for a worker to meet their basic needs during a 40 hour work week.  This includes shelter, clothing, food etc.  Some cities has passed a living wage ordinance such as San Francisco, California, Santa Fe and Albuquerque, New Mexico.  This usually totals to be around $3 to $7 dollars above minimum wage.

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