Here are some facts and thoughts on the minimum wage.
- Today’s minimum wage is $7.25 / hour.
- The current average hourly rate is $24.15 / hour.
- When President Franklin D. Roosevelt first created the minimum wage in 1938, it was 25 cents. Adjusted for inflation, that would be worth $4.07 today.
- Relatively few Americans actually earn the minimum wage. In 2011 and 2012, 3.7 million Americans reported earning $7.25 or less per hour—just 2.9 percent of all workers in the United States.
- The minimum wage had its lowest buying power in 1948, when it was worth about $3.81 in today’s dollars. It had its highest buying power in 1968, when it was worth about $10.56.
- At $7.25 in 2012, our current minimum wage is in the middle of those two extremes for the low and high. Hardly a case for support for change.
- Minimum wage positions are typically learning wage positions—they enable workers to gain the skills necessary to become more productive on the job. As workers become more productive they command higher pay and move up their career ladder. Two-thirds of minimum wage workers earn a raise within a year. Raising the minimum wage makes such entry-level positions less available, in effect sawing off the bottom rung of many workers’ career ladders. This hurts these workers’ career prospects.
- Congress typically raises the minimum wage only during times of healthy economic growth and low unemployment. In 1990, Congress enacted a minimum wage hike that took effect on April 1 of that year, when unemployment stood at 5.4 percent. Congress voted to raise the minimum wage again in August 1996—when unemployment stood at 5.1 percent. The next vote to raise the minimum wage occurred in May 2007, when unemployment stood at 4.4 percent.Congress has not voted to raise the minimum wage when unemployment stood above 7.5 percent since the Great Depression ended.
- Minimum-wage workers under 25 are typically not their family’s sole breadwinners. Rather, they tend to live in middle-class households that do not rely on their earnings—their average family income exceeds $65,000 a year. Generally, they have not finished their schooling and are working part-time jobs. Over three-fifths of them (62 percent) are currently enrolled in school. Only 22 percent live at or below the poverty line, while two-thirds live in families with incomes exceeding 150 percent of the poverty line. These workers represent the largest group that would benefit directly from a higher minimum wage, provided they kept or could find a job.
- Adults who earn the minimum wage are less likely to live in middle- and upper-income families. Nonetheless, three-fourths of older workers earning the minimum wage live above the poverty line. They have an average family income of $42,500 a year, well above the poverty line of $23,050 per year for a family of four. Most (54 percent) of them choose to work part time, and two-fifths are married.
- Just 4 percent of minimum-wage workers are single parents working full time, compared to 5.6 percent of all U.S. workers. Minimum-wage earners are actually less likely to be single parents working full time than the average American worker.