Minimum Wage

The following chart shows that since 1980, the Federal Minimum wage has effectively dropped from about $10 per hour to $7.25 per hour (in 2018 dollars).  The red line is the constant $ federal minimum wage.  The green line is the constant $ Massachusetts minimum wage.

You can also see that the earning power of a minimum wage worker plummeted in 1980 and stayed low ever since. 

The next chart shows 10 year average earning power.  The gray line is the earning power a minimum wage worker would have had if the minimum wage was adjusted for inflation every year starting in 1979 when the federal minimum wage was $2.90.  The red line is the earning power of a minimum wage worker at the actual federal minimum wage.

The area between the gray line and the red line indicates the earning power lost by minimum wage workers (due to inflation and congressional inaction).  The orange line shows the effect of increasing the federal minimum wage to $18 per hour in $1 steps starting in 2020.  Even at that much of an increase, the area above the gray line and below the orange line is only barely enough to make up for 40 years of neglecting minimum wage workers.

The blue line shows the same effect for the Massachusetts minimum wage.  We can see that even in a progressive state like Massachusetts, minimum wage has failed to keep up with inflation for the last 40 years.  It's unlikely that was intentional.  The real problem here is that legislative bodies are not at all good at doing annual bookkeeping.  We really need to put minimum wage on auto-pilot:  It should follow what I am calling the "CPI Wage" in the chart once the CPI wage catches up with the restorative boost to $18 per hour.  Perhaps the executive branch should have the authority to postpone increases for a year or two in the event of a recession.

Both parties have been using the minimum wage as a political tool.  That must stop.  It huts people when this is managed inconsistently.