With President Obama touting a $10.10 national minimum wage and Congress refusing to pass the increased wage, everyone seems to be talking about wages and whether or not they should be increased. In order to fully understand the depth of the problem, it is necessary to look at the discrepancy between minimum wage and the cost of living and examine both in the past. Somewhere during the last several decades, wages have failed to keep up with the cost of living and inflation. Perhaps this would be a better argument for those trying to enact a higher minimum wage.
The first minimum wage laws in the United States were passed in 1938. Prior to this time, employees often worked an unlimited number of hours, with little pay and no benefits. The depression had put a dent in the nations’ economy and President Franklin Roosevelt helped to create the law which Congress soon passed. At first, minimum wage seemed to keep up with living expenses and the inflation rate. However, a chart by shows that, considering the constant dollar of 1996… the time when our nation was at its best financially, the value of minimum wage began in decrease markedly in the mid 1980’s. A look at minimum wages through the years, as related to the constant dollar of 1996, shows that things have not kept pace.
Infoplease compiled a chart with the year, minimum wage and 1996 constant dollar amount from 1955 to 2013. A look at years since 1980, brings home the issue that actual wages have dropped in relation to the 1996 dollar. In 1980, the minimum wage was 3.10 and was equal to 5.90 in constant dollars. In 1990, minimum wage was 3.80 and was to 4.56 in constant dollars. 2000 had a minimum wage of 5.15 that was 4.69 in 1996 dollars. 2010 saw an increase in minimum wage to 7.25 which was equal to 4.25 in constant dollar. As of 2013, minimum wage was 7.25 but only equal to 4.87 in 1996 dollars. A look at the information shows that in some years, the constant dollar amount rose, however most of these years correlate with a rise in minimum wage. Constant dollar amounts almost always dropped, until the next increase occurred.
Cost of Living
Everyone knows that the cost of living has increased. An actual look at data and numbers is even more shocking. The People History.com website compares prices through the last 70 years of basic necessities. In 1980, a loaf of bread cost .50 cents while the same bread as of 2013 cost a consumer 1.98, which is a 396 percent increase. A gallon of gas was 1.19 in 1980 and last year was 3.80, which is a 319 percent increase in prices. A typical car in 1980 cost 7100 while the typical car today costs 31,352, a percentage increase of 441 percent. Prices on just these three items have collectively increased near 4 times the prices in 1980, or over 400 percent!
Minimum Wage Percentage Need to Keep Pace
As discussed, 1980 minimum wage was 3.15, compared to 7.25 in 2013. This was only an increase of 2.33, or a little over 200 percent. To keep pace with the increase in living expenses, the minimum wage from 1980 would need to have increased by at least 4 times or 400 percent.Just comparing three necessities, shows that the cost of these basic items, have increased on the average of 400 percent, or 4 times what they were in 1980. A logical conclusion is that minimum wage would need to increase by the same amount to keep up with the cost of living. Using simple math of increasing 1980s minimum wage by 4 times, or 400 percent, the new minimum wage needed to keep up with costs would be 12.40. Now Obama’s 10.10 doesn’t sound so ridiculous after all!
Officials need to start presenting the point for increased minimum wage with statistics. At the same time, they need to link the cost of living expenses and the rise in inflation in order to make a valid argument. Our citizens trying to make ends meet on minimum wage jobs, deserve politicians and business owners who will work for a decent wage that keeps up with the cost of living.