Jophiel wrote:
Actually, it's a very real issue that minimum wage hasn't kept up with inflation. In 1938, it was 25¢ and hour. Today it's $7.25 for a $7/hr increase. But, adjusted for inflation, it was $4.20/hr in 1938 meaning that the "real" increase has been $3.05 over the past 77 years.
Ok. The way you wrote that is extremely misleading. The minimum wage in 1938 was the equivalent to a minimum wage of $4.20/hour today. The point being that not only has minimum wage kept up with inflation relative to its starting purchasing value, but it's in fact 72% higher than what it would be if we'd simply pegged it to inflation rates back in 1938. So those who argue for tying minimum wage to inflation should be arguing for a decease in minimum wage to $4.20/hour, not an increase.
Quote:
At its height, it was (adjusted) $10.86/hr -- a fair bit higher than the current $7.25 mandate and, in fact, $10.10 has been a common "target" for advocates looking to raise the wage.
Sure. If we want to arbitrarily pick the period when it had the highest relative value. But the point is that if we'd done as the "adjust to inflation" people want, we'd never had had that high point to begin with. Deciding to pick that highest value and adjust for inflation from there is spurious. You could randomly pick any time and start there, right? Why pick the highest one? Why not the lowest? Why not an average level?
And that's before pointing out that using the 70s as a benchmark for economic valuation is probably a really bad idea. One might even suggest that said time period perhaps should serve as a strong (or at least a decent) argument for *not* raising the minimum wage. It's just one data point, but we have an example where high relative minimum wage was directly correlated to one of the worst periods economically speaking in the US (post great depression at least). I find it ironic that now when we're in another poor spot, the same "let's raise the minimum wage" argument rears it's ugly head, as though we didn't learn our lesson the last time.
You can dismiss this as unrelated correlation, but given that sluggish job markets and high inflation are two of the downsides opponents to a high minimum wage argue about, maybe it's not something we should just ignore. I think we've gotten accustomed to certain economic realities that have existed since the 80s on, and forget that at least some of the reason we assume these are "normal" is because we changed economic approach after the disaster that was the 70s. It just seems like some people really really want to try to recreate those crappy economic conditions, and pegging minimum wage to the rate we had back then is just one more way to accomplish that.
So yeah. Bad idea. Bad point in time to peg the wage to. Why not aim for good economic times, and not bad?
Edited, Nov 4th 2015 6:19pm by gbaji