Congress has never let the minimum wage erode for this long
Workers are demanding living wages even if Congress itself refuses to raise the minimum wage. | Seth Wenig/AP

June 16th marks the longest period in history without an increase in the federal minimum wage. The last time Congress passed an increase was in May 2007, when it legislated that the minimum wage be raised to $7.25 per hour on July 24, 2009. Since it was first established in 1938, Congress has never let the minimum wage go unchanged for so long.

When the minimum wage remains unchanged for any length of time, inflation erodes its buying power. As shown in the graphic, when the minimum wage was last raised to $7.25 in July 2009, it had a purchasing power equivalent to $8.70 in today’s dollars. Over the last 10 years, as it has remained at $7.25, the purchasing power of the minimum wage has declined by 17 percent. For a full-time, year-round minimum wage worker, this represents a loss of over $3,000 in annual earnings. Moreover, since its historical peak in February 1968, the federal minimum wage has lost 31 percent in purchasing power—meaning that full-time, year-round minimum wage workers today have annual earnings worth $6,800 less than their counterparts five decades ago.

A simple way to fix this problem once and for all would be to adopt automatic annual minimum wage adjustment (or “indexing”) as 18 states and the District of Columbia have done. The Raise the Wage Act of 2019 would raise the federal minimum wage to $15 by 2024—boosting wages for nearly 40 million U.S. workers—and establish automatic annual adjustment of the federal minimum wage. Automatic annual adjustment would ensure that the paychecks of the country’s lowest-paid workers are never again left to erode.


CONTRIBUTOR

David Cooper
David Cooper

David Cooper is a senior economic analyst at the Economic Policy Institute and deputy director of the Economic Analysis and Research Network (EARN). He conducts both national and state-level research, with a focus on the minimum wage, wage theft, employment and unemployment, poverty, and wage and income trends.

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