Tuesday, August 27, 2013

Minimum Wage was $9.44 in 1968

The minimum wage should be $16.54 today.

In 1963 when John Kennedy was in the White House, the minimum wage, when adjusted for inflation, was $8.37 --- a dollar and 12 cents higher than today's rate of $7.25.

Sylvia A. Allegretto and Steven C. Pitts lay out the math in a paper for the Economic Policy Institute. At its highest point (in inflation-adjusted dollars) the minimum wage was $9.44 in 1968. It's 23 percent lower now. And despite those who claim that a higher minimum wage leads to greater unemployment, the official unemployment figure in August of that year was 3.5 percent, less than half the current rate of 7.4 percent.

Productivity has risen - but working people have seen none of the resulting wealth. As Lawrence Mishel and Heidi Shierholz, also of the Economic Policy Institute, note: "During the Great Recession and its aftermath (i.e., between 2007 and 2012), wages fell for the entire bottom 70 percent of the wage distribution, despite productivity growth of 7.7 percent."

In fact, as Dean Baker and Will Kimball point out, "If the minimum wage had kept pace with productivity growth it would be $16.54 in 2012 dollars" - and that's using a conservative estimate of that growth.

Instead all of the resulting wealth has flowed to the wealthiest 1 percent in this country. That's no accident. It's the result of decisions made in corporate boardrooms, in the corridors of power, and in those corrupted places where those two settings merge into one.

1 comment:

  1. When Obama suggested a minimum wage of nine dollars an hour there was a great deal of weeping from the GOP.