Minimum Wage Stuck in the 1950s? No Way
Are you better off than you were 40 years ago? Not if you’re a minimum wage worker. It would take $9.92 today to match the buying power of the minimum wage at its peak in 1968.
The minimum wage is stuck in the 1950s. With the raise to $7.25 per hour, the minimum wage is higher than 1950s inflation-adjusted $6.71, but lower than the 1956 minimum wage of $7.93 in today’s dollars. The long-term fall in worker buying power is one reason we are in the worst economic crisis since the Great Depression.
Consumer spending makes up about 70% of our economy. The minimum wage sets the wage floor. We can’t build a strong economy on poverty wages. A growing share of workers make too little to buy necessities — much less afford a middle-class standard of living.
Meanwhile a growing share of business revenue has gone to executive pay and profits. In 1968, the richest 1% of Americans had 11% of national income. By 2006, they had 23% — the highest share since 1928, right before the Great Depression. We can’t build a strong, sustainable economy on a 1950s’ wage floor, 1920s’ income gaps and ballooning Wall Street bailouts.
~From "Minimum Wage Stuck in the 1950s" in the Miami Herald
From a previous CD post:
In 1949, the minimum wage was $0.40 per hour, and a full-time summer job (40 hours per week for 12 weeks) would have generated $192 in total summer earnings (ignoring taxes). Using a Sears catalog for retail prices, $192 would have only purchased the following 4 items in 1949:
Now contrast that with 2009. At the current minimum wage of $7.25 per hour, a full-time summer job will generate about $3,500 this year, which would be enough to purchase the following list of 28 items (click to enlarge):
Bottom Line: The inflation-adjusted minimum wage might be stuck in the 1950s, but when you adjust for the purchasing power of what you can buy with income earned at the minimum wage, the minimum wage today is light years ahead of the minimum wage of the 1950s.
As economist W. Michael Cox (chief economist at the Federal Reserve Bank of Dallas) reminds us:
Add it all up. When it comes to their economic prospects, today’s young Americans are the Luckiest Generation in history—at least until their children grow up and forge an even luckier one. And even if real wages are flat, the explosion of new products over time at lower and lower prices translates into a rising standard of living for all income groups, even minimum wage workers.