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[VoluntaryAmerican]

The Minimum Wage Is Stuck at $7.25; It Should Be $21.16 — or Higher

Posted on July 24, 2012 by Salvatore Babones

America’s minimum wage was raised to $7.25 per hour on July 24, 2009. It’s still there. Unlike almost all other federal benchmarks, the minimum wage is not updated for inflation.

The minimum wage reached its (inflation-adjusted) historic high in 1968, when it was raised from $1.40 to $1.60 per hour. Adjusted for inflation using the BLS online inflation calculator that would come to $10.55 per hour in 2012 dollars.

That $10.55 figure is the focus of a nationwide campaign organized by the National Employment Law Project (NELP). In today’s political climate it would certainly be a major accomplishment to achieve a $10.55 minimum wage. But $10.55 is still far too low.
Using 1968 as our benchmark for the minimum wage implies that low-wage Americans today should be making just as much as low-wage Americans were making 44 years ago. That benchmark is — frankly — ridiculous.

Can you imagine Americans of 1968 settling for a minimum wage standard of living that had been set based on 1924 standards? What about 1880 standards? At some point we should expect low-wage workers to start living better than they used to. Don’t low-wage Americans deserve to live in the 21st century, not the mid-20th?

Can you imagine Americans of 1968 settling for a minimum wage standard of living that had been set based on 1924 standards? What about 1880 standards? At some point we should expect low-wage workers to start living better than they used to.

A better way to update the minimum wage is to benchmark it to personal income growth in the economy as a whole.

Per capita real personal income excluding current transfer receipts — that is, the personal income earned in the economy, excluding Social Security and other government programs, adjusted for inflation — has grown by 100.6% since 1968.

In other words, the NELP has it too low — by half. If our standard for minimum wages had kept pace with overall income growth in the American economy, it would now be $21.16 per hour.

Yes, had the US income distribution and US standards of decency remained exactly what it was in 1968, the minimum wage would now be $21.16 per hou.

I grew up on the idea that America stood for progress, continual progress toward a better society. Even a $21.16 minimum wage wouldn’t represent progress. It would mean socially standing still, just with better technology and higher productivity levels. Progress would mean a minimum wage in excess of $21.16 per hour.

Of course, a minimum wage in the mid-20s is politically inconceivable. But it is technically, economically, and socially realistic. The only reason we can’t have it is the greed of those at the top and the intransigence of those at the near-top. The only reason we can’t have it is that we don’t want it.
We are not the Americans of 1968.

http://inequality.org/minimum-wage/


LOL

[silverhandorder]

Effective wage is even lower anyways. I want to see him try and tell us what he thinks the effective wage should be.

[Swarmed]

Translation: unemployment should be 80% - or higher

[rpwi]

Yeah, I don't see the logic of how having no job is better than having a low paying job. An interesting side-effect however of a minimum wage would be that it would cut down on illegal immigration and encourage capital investment (not saying we should have minimum wage though).

The other problem with the minimum wage is that it ignores intangibles. If you raise the minimum wage...benefits, working conditions, training, work schedules, safety and a number of other factors will decrease to compensate for the higher minimum wage.

[Steven Douglas]

An interesting side-effect however of a minimum wage would be that it would cut down on illegal immigration and encourage capital investment (not saying we should have minimum wage though).

How so? Conventional wisdom says the exact opposite. Increasing the minimum wage prices many legal laborers out of the market, while enlarging the black market that already exists for under-the-table dealings with people (read=illegal immigrants) willing to take less for their labor and not report it. Hell, day laborers in front of Home will work for $7, but $10 is the going rate they're shooting for; more if it's truly backbreaking, labor intensive, or requiring a skill set of some kind. Raising the minimum wage would only place upward pressure on demand for black market laborers willing to undercut it.

[rpwi]

How so? Conventional wisdom says the exact opposite. Increasing the minimum wage prices many legal laborers out of the market, while enlarging the black market that already exists for under-the-table dealings with people (read=illegal immigrants) willing to take less for their labor and not report it.

Oh, absolutely. But I think a good percentage of labor done by illegal immigrants is quasi-legal. The businesses (fast-food, construction, janitorial, etc...) properly pay FICA and document their workers....just that most illegals use forged ID's. For these quasi-legal employees, they can't get cash under the table if a minimum wage shuts them out of the work-place which will result in unemployment and a disincentive to come into the US.

[cubical]

$21 per hour as the minimum wage? Did I really just read that???

My favorite part... "The only reason we can’t have it is that we don’t want it."

LOLOLOLOL

How about no minimum wage and you allow people to negotiate the cost of their labor individually. I am sure nationwide panic would ensue if an employee agreed to work for $5 an hour, but I bet we would all survive.

[tttppp]

$21 per hour as the minimum wage? Did I really just read that???

My favorite part... "The only reason we can’t have it is that we don’t want it."

LOLOLOLOL

How about no minimum wage and you allow people to negotiate the cost of their labor individually. I am sure nationwide panic would ensue if an employee agreed to work for $5 an hour, but I bet we would all survive.

I wouldn't have a problem if some jobs offered zero wages. Lower wages allow more people to get jobs and prove they deserve higher pay and promotion opportunties. The minimum wage doesn't just eliminate low paying jobs, it eliminates high paying jobs from people that would have worked their way up.

[tttppp]

That would basically make eliminate all jobs that don't require a college education. I'm surprised Obama isn't on this. Raising the minimum wage seems like something he'd want to do.

[heavenlyboy34]

That would basically make eliminate all jobs that don't require a college education. I'm surprised Obama isn't on this. Raising the minimum wage seems like something he'd want to do.

lolz...can you imagine-in the not-too-distant future, McDonald's requiring a BA minimum just to hire burger flippers to justify 20+ bucks/hr?

Thnx for the article, OP. I lol'ed.