![]() However, different analysts may come to very different conclusions about potential job losses, based on what model that they use. Many arguing against raising the minimum wage point to potential job losses that will result from businesses absorbing the costs of having to pay employees more. Raising Minimum Wage Will Kill Jobs and Increase Prices of Goods and Services Here are common arguments for and against raising the minimum wage. As a result, there is debate on exactly how raising the minimum wage would affect employment, small businesses and the federal deficit. ![]() There are multiple ways researchers model the effect of a minimum wage increase, along with different variables that researchers focus on, such as industry or the age of people affected. According to an analysis of the $15 minimum wage increase from the Congressional Budget Office, 17 million Americans have earnings below $15 per hour and would be directly affected by the hike. ![]() However, a minimum wage increase doesn’t just help those earning at and under the minimum wage. Together, these individuals represented 1.9% of all hourly paid workers. In 2019, 392,000 workers earned exactly the minimum wage, and 1.2 million workers earned below the minimum wage (these are typically people in the hospitality industry who receive tips to make up for their hourly wage being below the federal minimum, such as servers at restaurants). Undefined | Forbes Advisor Economic Policy InstituteĪ similar 2018 analysis by Pew Research points out the $4.03 per hour minimum wage in January 1973 has the same purchasing power of $23.68 in August 2018-more than three times the actual minimum wage.Įach year, the Bureau of Labor Statistics does a deep dive into who is living off the minimum wage. The current federal minimum wage, adjusted in 2020 dollars, has less purchasing power than it did from the mid-1950’s to around 1980. It’s clear that the federal minimum wage’s purchasing power-the amount of goods or services that your money can buy-has severely eroded over time. What was the purchasing power, in today’s dollars, of the minimum wage over time? To get a grasp on the federal minimum wage over time, and just how strong-or in some cases, weak-it was, it’s also important to look at it from a standpoint of inflation. As America became economically stronger, workers throughout the labor chain were growing along with it.Īlthough economic productivity continued to grow, the pace of wage growth started slowing after 1968, and the minimum wage stopped rising with inflation. ![]() Through the 1940s-1960s, the wage increases kept pace with productivity growth (meaning more goods and services are produced per hour) and inflation. The federal minimum wage has increased 22 times since its inception, inching its way up from cents on the dollar to today’s $7.25 rate. It was the first time the federal government stepped in to establish a standard of pay for workers-and though it was originally drafted to be 40 cents an hour, it was pared down to a mere 25 cents per hour, in order to win support from southern state representatives. The federal minimum wage was implemented in 1938 under the Fair Labor Standards Act. For every argument in favor of raising the wage, there seems to be an equally appealing argument against it.īut when looking at the bigger picture-who the minimum wage impacts, who would benefit from raising it, how it currently compares with inflation and its long-term effects for the economy-one thing is clear: An increase at the national level is overdue. And although the Senate parliamentarian has declared it cannot be passed through the budget reconciliation process, House Democrats are still leaving the language in the bill in hopes of getting it passed one way or another.Ī closer look at the debate around raising the minimum wage reveals how arcane the surrounding research is. Democrats have proposed raising the wage to $15 an hour in the next stimulus package. The current federal minimum wage, which sits at $7.25 an hour, hasn’t been raised since 2009. There are few political arguments more polarizing than raising the federal minimum wage.
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