Minimum Wage History

A federal minimum wage was first set in 1938. The graph shows nominal (blue diamonds) and real (red squares) minimum wage values. Nominal values range from $0.25/hr in 1938 to $6.55/hr as of July 2008. The graph adjusts these wages to 2007 dollars (red squares) to show the real value of the minimum wage. Calculated in real 2007 dollars, the 1968 minimum wage was the highest at $9.47. The real dollar minimum wage (red squares) falls during periods Congress does not raise the minimum wage to keep up with inflation. The period 1997-2007, is the longest period during which the minimum wage has not been adjusted. The minimum wage increases in three $0.70 increments--to $5.85 in 2007, $6.55 in mid 2008, and to $7.25 in mid 2009. The real values after 2007 are projected for future decline in purchasing power.

Many states have departed from the federal minimum wage. Washington's minimum wage will advance to $8.55 as of January 1, 2009. California and Massachusetts currently have minimum wages of $8.00.

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Multiplying the minimum wage by a work year of 50, 40-hour weeks gives the annual earnings that can be expected from a minimum wage job. The real annual income from a minimum wage job is the blue bars. The red line is the poverty level real annual income for a family of four. Minimum wages have never been sufficient to raise a family out of poverty, if only one member of the family works.
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The minimum wage has varied from a maximum of 90% of the poverty level in 1968 and has averaged two thirds of the poverty level since 1959, when the poverty level was established. The the lowest percentage the annual income from the minimum wage has been of the poverty level was 2006, just before Congress raised it for the first time in a decade. This is the longest period during which the minimum wage has not been adjusted
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As minimum wages have declined in real terms, the percent of workers covered, too, has declined. Over 130 cities now have "living wages."
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Sources: U.S. Bureau of the Census; U.S. Department of Labor, Bureau of Labor Statistics; Statistical Abstract of the United States; and Survey of Current Business.
For details: Smith 1989

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Updated:Sunday, 26-Oct-2008 22:00:59 PDT
URL is http://www.orst.edu/instruct/anth484/minwage.html