Minimum Wage should be $13.30

[jnw]

Since 1968, the average inflation year over year is 4%.   Minimum wage in 1968 was $1.60.
54 years have passed since 1968.

So adjusted for average inflation, based on 1968 minimum wage as base value, a fair minimum wage would be $13.30 :

$1.60 * 1.04^54 = $13.30

Do you agree?  Or have I left something out?  I have heard talk about raising minimum wage to $15 but according to inflation, that'd be higher wage compared to 1968 minimum wage.  Unless the CPI over the last 54 years has left something out.

A couple working at $13.30 each would bring in a household income of about $54k, which is a biit under the median household income, which is around $65-70k I guess.  But I am sure they could get buy if they were careful with their money.  People are unfairly living in poverty because they are underpaid.. $7.25/hr is unfair.

[gooki]

That calculation assume the minimum wage in 1968 was fair.

My 2 cents says make the minimum wage as high as possible. Trickle down economics doesn't work, but trickle up does make everyone richer.

[nereo]

That calculation assume the minimum wage in 1968 was fair.

Indeed

Your calculations of a household income of $54k also assumes one with two wage earners who can both work 40 hours per week. This is not the reality for many. 

Finally, I would say it matters a great deal whether that sum includes benefits like health care or child care.  If not, single-earners will continue to rely on subsidized healthcare plans, which is a good indication that the amount is far too low.  The median annual cost of health-care in the US for a family of 4 is about $25k. The median cost per child of day-care is around $8k.

And I’m not sure how you arrived at $13.30 exactly or “4% inflation”; my quick googling suggests a value of $13.06 and inflation just a touch below the 4% mark.  Minor of course but OP asked about calculations

[stoaX]

  Unless the CPI over the last 54 years has left something out.

Life in the US has changed so much in the last 54 years it's almost impossible to make a good comparison of minimum wage today vs back then.  Do you compare a landline phone from the 1960's to a basic cell phone today or to a smartphone?  And how much did a PC cost in 1968 vs one today?  Saving for retirement today involves funding for a possibly longer period of time compared to back then.  Even a car today is quite different than one back then.

I could go on and on...

 Also, costs of living vary so much depending upon where you live, it might make more sense to focus your efforts on state or municipal minimum wage laws.

[Morning Glory]

Not going to split hairs over the actual amount,  but yes I think 40 hrs/week at minimum wage should be enough to provide adequate shelter, food, and necessity for a small family without relying on government benefits. Any business that can't both  pay a living wage and make a profit should go out of business.

If we had national Healthcare the amount wouldn't need to be so much.

[Paper Chaser]

I'm not sure the Federal minimum wage is relevant in the current labor market. I live in a LCOL state with a $7.50/hr minimum wage. Fast food places are hiring people at $13+/hr and factories/warehouses are typically closer to $20/hr for unskilled work with no formal education.

[Morning Glory]

I'm not sure the Federal minimum wage is relevant in the current labor market. I live in a LCOL state with a $7.50/hr minimum wage. Fast food places are hiring people at $13+/hr and factories/warehouses are typically closer to $20/hr for unskilled work with no formal education.

I'm sure there are still people making less than those amounts in your area. It's surprising the number of people who get comfortable in a job and stay there even if better opportunities are plentiful. They might grumble in the breakroom about new people making more than them but they won't actually do anything about it.

[Phenix]

I struggle to grasp the concept of one minimum wage for the whole country and honestly, even for an entire state it doesn't make sense. I don't feel Federal Income Tax rates make sense either. I live in a LCOL area and right at the top of the 12% tax bracket. My job in a nearby HCOL area would put me well into the 22% tax bracket (not to mention, much smaller living quarters, higher property taxes, and lower quality schools).

Making sweeping federal policies based on averages or medians does not make sense.  Federal government should only be focused on policy where there are economies of scale to be gained. Defense, transportation, education, healthcare, etc.

[jim555]

New York it is already $15 an hour.

[bacchi]

I struggle to grasp the concept of one minimum wage for the whole country and honestly, even for an entire state it doesn't make sense. I don't feel Federal Income Tax rates make sense either. I live in a LCOL area and right at the top of the 12% tax bracket. My job in a nearby HCOL area would put me well into the 22% tax bracket (not to mention, much smaller living quarters, higher property taxes, and lower quality schools).

?? Tax brackets are marginal. 12% of $40k in Wichita and 12% of $40k in Seattle are the same amount.

Making sweeping federal policies based on averages or medians does not make sense. Federal government should only be focused on policy where there are economies of scale to be gained. Defense, transportation, education, healthcare, etc.

The same national minimum wage everywhere doesn't make a lot of sense but I'm unclear about what you're suggesting. Base it on the GSA per diem rate differentials somehow or eliminate minimum wage entirely because...reasons?

[YttriumNitrate]

Last year, Freakanomics did an interesting podcast about the minimum wage that is well worth a listen.

https://freakonomics.com/podcast/the-true-story-of-the-minimum-wage-fight-ep-460/

Basically, raising the minimum wage is a very blunt economic tool that in some instances will end up hurting those it was intended to help.

[Phenix]

I struggle to grasp the concept of one minimum wage for the whole country and honestly, even for an entire state it doesn't make sense. I don't feel Federal Income Tax rates make sense either. I live in a LCOL area and right at the top of the 12% tax bracket. My job in a nearby HCOL area would put me well into the 22% tax bracket (not to mention, much smaller living quarters, higher property taxes, and lower quality schools).

?? Tax brackets are marginal. 12% of $40k in Wichita and 12% of $40k in Seattle are the same amount.

And I clearly wasn't arguing that. My argument is that in a LCOL area using my career field as an example, I am right at the top of the 12% tax bracket at my current income level which means every discretionary dollar I spend in my personal budget is only taxed at 12%. If I were to move to a nearby HCOL area, I would make $20k-$30k more, but every one of those additional dollars I make I am strapped with an additional 10% income tax (22% vs 12%). Factoring in higher housing expenses & property taxes I would have less discretionary spending power in that HCOL area. Why does it make sense that someone has to pay a higher federal tax rate than me just because they live in a HCOL area and I live in a LCOL area?

This would be a great place to use per diem data and allow every person to deduct the standard cost of living in their area. Then pay income tax on any amount above that. Eliminate the standard deduction (all deductions for that matter) and replace it with a locality deduction. That would put someone in a big city on more of level playing field than someone living in the middle of a bunch of corn fields.

Making sweeping federal policies based on averages or medians does not make sense. Federal government should only be focused on policy where there are economies of scale to be gained. Defense, transportation, education, healthcare, etc.

The same national minimum wage everywhere doesn't make a lot of sense but I'm unclear about what you're suggesting. Base it on the GSA per diem rate differentials somehow or eliminate minimum wage entirely because...reasons?

Please point to where I said eliminate minimum wage entirely. My opinion is the minimum wage should be set based on location and would be better handled by state or local governments.

[seattlecyclone]

The converse of "any paid position should provide a decent standard of living to a small family without requiring government assistance" is "someone lacking the skills to add more than ($small_family_budget) to a business's revenue shouldn't be employed at all, and must live entirely off government assistance."

I think there's room for some sort of middle ground here: let people who have marginally valuable skills contribute what they can, earn some money, and make up the difference with government assistance. I'd personally love to transition into a universal basic income where everyone gets a decent standard of living regardless of how much they're contributing to some corporation's revenue. That would seem to make a minimum wage obsolete.

[bacchi]

This would be a great place to use per diem data and allow every person to deduct the standard cost of living in their area. Then pay income tax on any amount above that. Eliminate the standard deduction (all deductions for that matter) and replace it with a locality deduction. That would put someone in a big city on more of level playing field than someone living in the middle of a bunch of corn fields.

Ah, ok, that makes sense.

The counter argument would be that the people have chosen. They live in cities, and pay higher rent and buy more expensive food, because something in the city makes it worth it to them. Even most of the tech remote workers moved to smaller cities, like Boise, and not to, say, North Fork, ID.

Making sweeping federal policies based on averages or medians does not make sense. Federal government should only be focused on policy where there are economies of scale to be gained. Defense, transportation, education, healthcare, etc.

The same national minimum wage everywhere doesn't make a lot of sense but I'm unclear about what you're suggesting. Base it on the GSA per diem rate differentials somehow or eliminate minimum wage entirely because...reasons?

Please point to where I said eliminate minimum wage entirely. My opinion is the minimum wage should be set based on location and would be better handled by state or local governments.

I didn't see how "economies of scale" applied to minimum wage so I wrote that I was unclear (see bolded) and asked.

[Phenix]

Making sweeping federal policies based on averages or medians does not make sense. Federal government should only be focused on policy where there are economies of scale to be gained. Defense, transportation, education, healthcare, etc.

The same national minimum wage everywhere doesn't make a lot of sense but I'm unclear about what you're suggesting. Base it on the GSA per diem rate differentials somehow or eliminate minimum wage entirely because...reasons?

Please point to where I said eliminate minimum wage entirely. My opinion is the minimum wage should be set based on location and would be better handled by state or local governments.

I didn't see how "economies of scale" applied to minimum wage so I wrote that I was unclear (see bolded) and asked.

I see that now and I should have omitted that part as economies of scale doesn't tie in with the discussion at hand. My apologies for coming off grumpy in my response.

[Fishindude]

Minimum wage really isn't applicable now anyway.
From what I see the average starting wage is running $17-20 / hr for anybody that can show up to work.

[Chris22]

The federal minimum wage is a true floor. Many/most places have a different minimum wage (higher than federal) and usually HCOL areas have a higher minimum wage.

[nereo]

Minimum wage really isn't applicable now anyway.
From what I see the average starting wage is running $17-20 / hr for anybody that can show up to work.

According to this report, there is still over 50 million US workers who are making less than $15 per hour.

[simonsez]

The federal minimum wage is a true floor. Many/most places have a different minimum wage (higher than federal) and usually HCOL areas have a higher minimum wage.

When federal min wage was $5.15, I made $4.65 over the summer when I was 15/16.  This was not a tipped position.  I was simply younger than 20 and it was a summer job (so less than 90 days of work).  It felt illegal and I still grumble about it because of the fact of what a federal min wage is supposed to represent (or what I was told it represented).  But then I went and delivered pizzas also below min wage but with all the mileage and tips, I was flush with cash for years and felt like the king of the world.

https://www.dol.gov/agencies/whd/fact-sheets/32-minimum-wage-youth

But yes, I agree with your overall sentiment.  States and municipalities (and individual businesses of course) should set whatever wage policies that make sense for their specific geographic area on top of the federal minimum wage.

[YttriumNitrate]

Minimum wage really isn't applicable now anyway.
From what I see the average starting wage is running $17-20 / hr for anybody that can show up to work.

According to this report, there is still over 50 million US workers who are making less than $15 per hour.

It looks like that number includes just about every waiter:

Our numbers also include workers making a subminimum wage, including tipped workers.

https://www.oxfamamerica.org/explore/countries/united-states/poverty-in-the-us/low-wage-map-2022/

[Captain FIRE]

This would be a great place to use per diem data and allow every person to deduct the standard cost of living in their area. Then pay income tax on any amount above that. Eliminate the standard deduction (all deductions for that matter) and replace it with a locality deduction. That would put someone in a big city on more of level playing field than someone living in the middle of a bunch of corn fields.

Coming from someone in a HCOL area, that would be awesome.  But I can't see it ever happening because the rural states hold more power in the senate and this would disadvantage them as they have lower COL.  In fact, the opposite recently happened with a cap to deducting SALT that penalizes those living in large urban states with higher state/property taxes.

[ixtap]

I have seen estimates as high as $24, if you take increased productivity into account.

[teen persuasion]

New York it is already $15 an hour.

NYC is not NYS.

Minimum wage in NYS is $13.20 now.  It's been increasing at $.70 per year for a while. 

My coworkers have been getting raises the past three years, due to the minimum wage increases.  The director and I have not.  The Board of Trustees did finally vote for an increase for all employees this year, $.70 immediately, an additional $.30 in the new fiscal year in July.  I'm not clear if the minimum wage increase was folded into the first $.70, or effectively doubled for them.

[jim555]

Long Island, Westchester and NYC are $15.00 now.  $13.20 is everywhere else.  Thanks for the clarification.

[fuzzy math]

Living in the middle of nowhere, Midwest I see companies failing to hire below that level. People post jobs on the local FB groups and are laughed at if they're advocating hiring under that wage. So at least economics are enforcing wage increases even while federal policies haven't changed. I'd imagine that in higher COL areas (literally ANYWHERE) that its even better.

[Dicey]

Effective Jan. 1, 2022, the minimum wage in CA is $14.00 an hour. Would your overall quality of life improve if you moved here? HaHaHaHa.

[FINate]

Last year, Freakanomics did an interesting podcast about the minimum wage that is well worth a listen.

https://freakonomics.com/podcast/the-true-story-of-the-minimum-wage-fight-ep-460/

Basically, raising the minimum wage is a very blunt economic tool that in some instances will end up hurting those it was intended to help.

This is very much worth a listen/read, presents multiple points and counterpoints. The money quote:

What I take away from actually doing the analysis is that the actual impacts of the minimum wage are not necessarily worth all the sound and fury. I mean, we didn’t find any evidence that it destroys businesses because the businesses adapt. It does not necessarily transform workers’ lives because of the hours question, really. So it’s a big fight over what is really not that transformative of a policy.

[FIPurpose]

Effective Jan. 1, 2022, the minimum wage in CA is $14.00 an hour. Would your overall quality of life improve if you moved here? HaHaHaHa.

Interesting OR's is 13.50 (14.75 in Portland though) in July and WA's $14.50. Sounds like they're a better deal overall compared to CA.

I also didn't realize that the West Coast doesn't have a tipped wage. I think I'll keep my tips a little lower then.

Weird that the West Coast isn't blowing up due to their wage increases even compared to NE ;P

[Dicey]

Effective Jan. 1, 2022, the minimum wage in CA is $14.00 an hour. Would your overall quality of life improve if you moved here? HaHaHaHa.

Interesting OR's is 13.50 (14.75 in Portland though) in July and WA's $14.50. Sounds like they're a better deal overall compared to CA.

I also didn't realize that the West Coast doesn't have a tipped wage. I think I'll keep my tips a little lower then.

Weird that the West Coast isn't blowing up due to their wage increases even compared to NE ;P

I don't care if there's a tipped wage or not, restaurant jobs are back-breaking. I am forever grateful that the only time I worked as a waitress was a one-off at a charity event. We don't eat out much, but when we do, I consider myself fortunate to be able to tip well. On our first date, I noticed DH tipped very generously. I asked if he'd ever worked in a restaurant.  He answered, "No, but it's hard work." Love that dude!

[jim555]

HCOL has some advantages.  I could get an easy $15 an hour (probably more) for a "side gig" if I ever needed it.  If I lived in $7.25 minimum state I would get half as much.

[stoaX]

HCOL has some advantages.  I could get an easy $15 an hour (probably more) for a "side gig" if I ever needed it.  If I lived in $7.25 minimum state I would get half as much.

In my corner of a $7.25 minimum wage state you would easily pick up a starting salary of $13 or more at any fast food joint.

[talltexan]

HCOL has some advantages.  I could get an easy $15 an hour (probably more) for a "side gig" if I ever needed it.  If I lived in $7.25 minimum state I would get half as much.

But do you know whether the need for the side gig is greater because the minimum wage has changed prices?