It's time to raise the minimum wage

AFL-CIO American Federationist, The, March 21, 1987 by Jay Mazur

The value (buying power) of the minimum wage has been declining steadily in the 1980s, as might be expected at a time when the minimum remained fixed while the cost of living climbed. Inflation since 1981 has reduced the purchasing power of the $3.35 minimum by 77 cents an hour. That amounts to a pay cut of $26.80 for a 40-hour work week.

(See Table A and Chart A on the falling value of the minimum wage.)

If an employer were to do this to his employees, especially to those most poorly paid, we would consider the act to be unconscionable. It is less unconscionable if Uncle Sam does it to his nieces and nephews?

The history of the minimum wage in the last two decades reads like a lesson in political science. When President Kennedy came into office in 1961 the minimum wage of $1.00 could buy what it would take $3.70 to buy today. Then as the minimum went to $1.15 in 1961 and to $1.25 in 1963 and, under President Johnson, to $1.40 in 1967 and $1.60 in 1968, the buying power of the minimum rose to its highest point in the years since 1950, able to puchase as much as it would now take $5.04 to buy.

The story of the Reagan years is quite the opposite. When he came into office in 1981, the minimum of $3.35--enacted under Carter--could buy what it would take $4.04 to buy in mid-1986. By 1987, that buying power had slipped steadily so that at present, the dollar equivalent would need to be $4.20--a 25 percent adjustment in real dollars.

Some may argue that "things are bad all over" and the working poor are suffering along with all other workers. In part, this notion is supported by the decline of real wages and salaries of non-supervisory employees. The fall in the minimum wage (real dollars) has however, been much steeper than the drop in the average wage. From 1950 to 1968, the minimum wage was always slightly higher than half the average hourly wage in the private sector--an intent of the law whenever Congress acted. Since then the minimum has slipped. Right now it is the lowest point since 1949, worth only 37 percent of the average wage.

Poverty Level Wages

Still another way to measure the minimum wage is to see whether it is adequate to keep a small family from falling into the pit of poverty. From 1960 to 1979--almost two decades--a wage earner working a full year at the federal minimum wage could support a family of three at an above-poverty level--with the exception of two years in the early 1960s and in 1973. From 1980 on, a wage earner, fully employed at the federal minimum wage, could not keep a family of three above the poverty line. In 1986, the wage earner at the minimum could earn about 80 percent of what would have been necessary to keep his or her family out of poverty. In absolute dollar terms, this breadwinner would fall about $1,800 short. To keep this household above the poverty line, the earner would have to work a full year (2080 hours) at $4.20 an hour--a full 85 cents more than at present. (See Chart B and Table B.)

In the 1980s, the minimum wage has been going from bad to worse; it has not kept up with the cost of living; it has not kept up with the average wage; it has not provided earnings sufficient to stay out of poverty. Because of neglect, it has not been as intended, an instrument "for protecting the worker from exploitation and assuring him (her) a living wage."