Americans Earn Less Than a 1950s Paycheck When Federal Minimum Wage is Adjusted for Inflation
Inflation has been wreaking havoc on many Americans’ bottom lines, driving up prices for groceries, retail and home goods and even the gasoline it takes to get to a job that provides the income to pay for these necessities. However, the millions that are making the federal minimum wage, currently set at $7.25, are likely feeling the pinch even more.
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According to new data released by the Economic Policy Institute, the actual value of minimum wage earnings is the lowest it’s been in 66 years, when adjusted for inflation and the cost of living. Meaning that someone today making $7.25 an hour is in theory earning less value for their income than someone in the 1950s. The last time the value of minimum wage earnings was lower was in 1956 when the standard was set at $0.75, or $7.19 when evaluated at the value of the dollar in June 2022.
This news comes at the same time the Raise The Wage Act has been mulling about in Congress since 2021, when it was first proposed arguing that there should be a significant increase in the federal minimum wage, raising it to a standard $15/hour, which many argue would provide a more rational living wage. In fact, according to Bloomberg, citing a report by Oxfam America, every one in three Americans is now making below $15/hour — that’s roughly 32% of the workforce or 52 million Americans.
As previously reported by GoBankingRates, this year 26 states took matters into their own hands, raising their own minimum wage rates on January 1 with many hitting at or near the $15/hour benchmark, including California, New York, Oregon and Washington. As Deirdre Kennedy, senior payroll analyst at Wolters Kluwer Legal & Regulatory U.S., noted in a supplied statement, “These minimum wage increases indicate moves toward ensuring a living wage for people across the country,” and adding, “In addition to previously approved incremental increases, the change in presidential administration earlier this year and the ongoing coronavirus pandemic have also contributed to these changes.”
In addition, 10 other states have vowed to raise minimum wages to $15/hour in the next three years including Connecticut, Massachusetts, Illinois, Maryland and Florida, among others, echoing the calls of the Fight for $15 movement that has “resulted in $150 billion in higher pay for 26 million workers,” according to a report by the National Employment Law Project.
Yet, on the federal level, the last time the U.S. government raised the minimum wage was 13 years ago in 2009 when guaranteed earnings increased from $6.55 to $7.25, with the current stalling on another increase marking the longest stretch since the minimum wage was instituted as a federal policy in 1938. Since then, Congress has raised the federal minimum wage 20 times since World War II, per CNBC.
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In 2009, coming off a massive national recession, the picture was even better than it is now, as CNBC notes, “A person earning the minimum wage for a full-time job in 2009 when it was raised to $7.25 was effectively earning $5,000 more than a person earning the same wage and working the same hours today.”
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