The federal minimum wage is $7.25 an hour.
Comparing that
1950
$0.75 an hour
$8.65 adjusted for inflation
1960
$1
$9.39 adjusted for inflation
1980
$3.10
$10.50 adjusted for inflation
A lot of pepper have cited the minimum wages lack of ability to keep up with inflation as a big problem in the economy, hurting the poor and middle class.
And I keep seeing a ton of social media content directed at that.
“The cost of college in 1980 versus today. The minimum wage today versus 1980.”
“No city in America can someone afford an apartment a two bedroom apartment on the minimum wage.”
“CEO average pay. Minimum wage.”
A lot of content citing the lack of minimum wage growth as a problem and advocating for a $15 minimum wage in this claim it’ll fix the economy.
Want to look at that just a bit more.
First thing, how much people actually make minimum wage and where does that compare with previous years?
Before writing this, I asked a few people what their guess was and they all said about 10%, with one saying 20%.
Actual number?
1.5%
Right now, only 1.5% of American’s make minimum wage, which is down from 2.7% a decade prior.
After that, I looked up the point in history when the highest percentage of Americans made minimum wage and it was in 1979, at 13.4% of the country.
That was during the period the minimum wage was adjusted for inflation closer to $10.50-11 an hour.
The reason this is important to know is it shows a trend where wages go up regardless of minimum wage increases, with inflation. About 10% of Americans are making under $12 an hour now, which even without regulation, puts the US on par with 1980 numbers.
Second point, the demographics on minimum wage earners.
48% of people making minimum wage today are 16-24.
22% are 25-35
This is important, because it gets a clearer picture at the minimum wage economy.
Very few are in the age zone they’d be supporting families or not have a parent/partner help financially support them.
Another important point to this is type of job where 55% of minimum wage jobs are part time.
This is important, because for many they aren’t the primary source of income.
Key here is we have very few people with a family of four making the minimum wage as a full time position.
Third point was looking at $15 an hour.
Today, 80% of Americans make over $15 an hour with their jobs.
Breaking that down more, 90% of Americans over 30, 85% over 25 and for full time work, it’s 95% of jobs.
This is important, because it shows more skilled labor is making over $15 already and also shows that the vast majority of American’s wouldn’t actually see any income increase from a $15 an hour minimum wage.
It’s also important to note the CBO did a study on the minimum wage in 2016 when the $15 minimum wage was proposed and found it’d cost 3-4 million jobs and only 10% of people to get a pay increase over $1 would come from poverty.
Fourth point is our minimum wage average versus federal minimum wage.
The federal minimum wage has fell flat at $7.25, but that’s not the minimum wage in most states.
29 states have different minimum wages, which are all higher over the federal minimum wage and many of these states didn’t have these policies in 1980, most just in the last 10-20 years.
These states include large ones like California & NY, which if factoring in their population and wages, it shows the average minimum wage in the US is closer to the $10.50 minimum wage we’d see if adjusted for inflation in 1980.
And those are the reasons I don’t buy into the fight for $15 or even the idea of a minimum wage in the first place.
- Wages clearly already naturally climb.
- The demographics are part time labor which is learning new skills.
- The vast majority “90%” of Americans will make well over $15 an hour by the time they enter their 30s.
- We already have state/city minimum wages, which put us on par with history.
I also think the fight for $15 is pretty dangerous.
The highest point for the minimum wage to inflation was the late 70s & early 80s, which was about $10 an hour and we had over 10% of Americans making minimum wage.
$15 an hour, would put it 50% higher over the highest point and I think there would be millions of jobs lost and even more see hours reduced. I also don’t think it’d be in places like manhattan, but in lower performing areas.
I also just don’t look at the numbers and find the minimum wage as a big enough piece of the economy. Not even 2% of American’s make it today and for full time work, it’s only .5% of jobs. Even on the $15 an hour point, that’s not an increase for many.
So why is raising the minimum wage a popular idea?
Want to talk about the high cost of rent?
That creates a discussion on zoning laws, property development, permits for building and more.
Want to talk about the cost of energy?
That creates a conversation on nuclear power, drilling more gas, solar and more.
Want to talk about food, healthcare, internet and other prices?
All their own issue with dozens, if not hundreds of factors in costs.
Even talking about raising wages is rough, where conversations on occupational licensing, manufacturing and education reform hit.
Lowering costs and raising wages is really difficult policy.
People calling to just raise the minimum wage and have almost a magic wand policy is really easy to say?
Does it work?
Probably not, but it gets attention.