History of the Minimum Wage

Summary

This video explores the ongoing debate about raising the U.S. federal minimum wage, which has remained at $7.25 since 2009. The speaker presents both sides of the argument, noting the benefits for low-wage workers versus potential challenges for small businesses. Using historical data adjusted for inflation, the video reveals that while the minimum wage is lower today in real terms than in 2009, most minimum wage workers currently earn around $12 due to state-level laws. The video emphasizes understanding the data before engaging in moral or ethical debates about the wage increase.

Takeaways

• 💼 The U.S. federal minimum wage has been stuck at $7.25 since July 2009, sparking a heated debate on whether it should be increased.
• 🔍 Democrats generally support raising the minimum wage, while Republicans typically oppose it, with arguments on both sides having merit.
• 📈 Historically, the federal minimum wage has seen significant growth, from 40 cents in 1947 to its current level.
• 📉 The longest period without an increase in the minimum wage has been 12 years, which is the current status as of the discussion.
• 💸 The nominal minimum wage does not account for inflation, which significantly affects the real value of the wage over time.
• 📊 When adjusted for inflation, the current minimum wage is lower than its value was in 2009 and below the 75-year average.
• 🏢 Some small businesses might struggle with a higher minimum wage, potentially leading to closures or increased consumer prices.
• 💹 The proposed $15 minimum wage would be the highest in U.S. history, even when adjusted for inflation.
• 🌐 The effective minimum wage varies by state and locality, with many areas already having higher minimum wages than the federal level.
• 👥 Only a small percentage of minimum wage workers earn the federal minimum wage of $7.25, with most earning more due to state and local regulations.
• 🤔 The decision to raise the minimum wage involves not just economic data but also moral considerations about fairness and the desired societal structure.

Q & A

What is the current U.S. federal minimum wage?

The current U.S. federal minimum wage is $7.25 per hour.

When was the last time the U.S. federal minimum wage increased?

The last time the U.S. federal minimum wage increased was in July of 2009.

What is the historical trend of the federal minimum wage over the last 75 years?

The federal minimum wage has grown from a low of just 40 cents per hour in 1947 to its current high of $7.25 per hour.

What is the longest period without an increase in the federal minimum wage?

The longest period without an increase in the federal minimum wage has been 12 years since the last increase in 2009.

Why is the nominal minimum wage misleading when comparing over time?

The nominal minimum wage is misleading because it doesn't adjust for inflation, which means the same amount of money could buy very different things depending on the year.

How does adjusting for inflation change the perspective on the minimum wage over time?

Adjusting for inflation shows that the value of the minimum wage in terms of purchasing power has fluctuated over time, with the current minimum wage being below its peak in terms of inflation-adjusted value.

What is the average inflation-adjusted value of the minimum wage over the last 75 years?

The average inflation-adjusted value of the minimum wage over the last 75 years was just under $8.50.

What percentage of workers earn exactly the federal minimum wage?

As of 2018, only 10.6 percent of workers who earned some form of minimum wage earned exactly the federal minimum wage of $7.25 per hour.

What is the average effective minimum wage across the U.S.?

The average effective minimum wage across the U.S. is just under $12 per hour, considering state and local minimum wage laws.

Which regions of the U.S. have the lowest effective minimum wages?

Workers who earn the lowest amount mostly reside in certain parts of the country, namely the South and parts of the Midwest.

What are the considerations when debating whether to raise the federal minimum wage?

Considerations include whether the federal minimum wage is too low compared to historical values, the fact that most workers already earn more than the federal minimum due to local laws, and the moral and ethical implications of setting a new minimum wage.