Four years since the last increase

July 24, 2009 was the last time the federal minimum wage went up (to its current level of $7.25 per hour). In connection with the anniversary of the last increase, some of my CEPR colleagues and I have prepared a series of blog posts on the minimum wage.

One of these posts looks at the 19 states that have set state-level minimum wage above the federal level:

Map of state-level minimum wages, 2013

Ten of the states with a minimum wage above the federal level have indexed future values of the state minimum wage to the rate of inflation.

A second post looks at the federal and state minimum wages for tipped workers (pdf) such as restaurant servers, hair stylists, manicurists, car washers and casino workers. The federal minimum wage for tipped workers is just $2.13 per hour –a rate that hasn’t changed since 1991. Thirty one states have set the minimum wage for tipped workers above the federal level; seven of those states require employers to pay the same minimum wage to tipped employees as to non-tipped workers.

Map of state-level minimum wages for tipped workers, 2013

A third post documents just how far the value of the minimum wage has fallen since it reached its peak value in 1968. If the minimum wage had kept pace with inflation after 1968 –when we had roughly half the income per person that we have today–the current value of the minimum wage would be almost $9.50 per hour. If the value were still about half the value of the average production worker –as it was in much of the 1960s– it would be about $10.00 per hour. If the minimum wage had kept pace with productivity growth after 1968 –as it had between its creation in the middle of the Great Depression through the end of the 1960s– it would be about $17 per hour today.

Value of the minimum wage in 2013, based on several benchmarks

A final post emphasizes that the current value of the minimum wage is even worse than it looks –because the low-wage workforce today is more experienced and much better educated than in the past. We don’t have data for 1968, but we do have data for 1979 and they show an enormous increase in the “human capital” of low-wage workers (which we define as those earning $10.10 per hour or less, in inflation-adjusted terms, where $10.10 is the new level of the federal minimum wage recently proposed by Senator Tom Harkin and Representative George Miller).

Low-wage workers today are older and therefore typically more experienced:

Bar chart showing change in age structure of low-wage workers, 1979 and 2012

Low-wage workers are also much more likely to have a high school or even a college degree than they were at the end of the 1970s:

Bar chart showing education distribution of low-wage workers, 1979 and 2012

All of these factors would lead use to think that low-wage workers should be earning more than they did in the 1960s or 1970s, not substantially less.

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