United States: Progress on the Minimum Wage
How today’s floor compares to the past.
April 14, 2016
1. In the United States, a wage-setting mechanism was first introduced in 1912 – at the state level and specifically for female workers – in the state of Massachusetts.
2. The United States did not see a nationwide minimum wage that applied to virtually all workers until the Great Depression-era “National Industrial Recovery Act of 1933.” It was struck down as unconstitutional for a time.
3. The minimum set back in 1933 was $0.25 per hour — equal to about $4.48 in today’s dollars, accounting for inflation.
4. The U.S. minimum wage actually peaked almost half a century ago, when it reached a nominal level of $1.60 back in 1968. In today’s dollars, that would be $10.97.
5. Productive output per worker per hour is also much higher today than in 1968, which is another consideration besides inflation to factor in.
6. The adjusted value of the 1968 minimum wage is more than 50% higher than the current U.S.-wide hourly minimum wage of $7.25 (about €6.00 in purchasing power terms).
7. The current federal minimum wage level was set by the U.S. Congress in 2009. In 2015, it was equal to about 40% of median U.S. hourly pay.
8. U.S. states and municipalities are free to set a higher minimum than the federal standard to reflect local economic conditions.
9. After activist and labor union organizing, cities such as Seattle, San Francisco and Los Angeles led the way by setting the local hourly minimum wage to rise (over time) to a level of $15. The state of California and the state of New York followed suit.
10. Some activists and economists, as well as select employers (such as IKEA), would prefer to see the federal minimum wage tied to local costs and conditions, rather than being set at a uniform level nationwide.
Source: The Globalist Research Center
The minimum set back in 1933 was $0.25 per hour — equal to about $4.48 in today’s dollars.
The minimum wage peaked in 1968, when it reached $1.60. In today’s dollars, that would be $10.97.
The adjusted value of the 1968 minimum wage is more than 50% higher than the current US minimum wage of $7.25.