Thursday, January 03, 2013

The Federal Minimum Wage

The graph shows the nominal value (darker blue) and the purchasing power (lighter blue) of the minimum wage (now $7.25 per hour). After the minimum wage is increased by act of Congress (the upward steps) it remains flat in nominal terms until the next increase. On the other hand the real value decays according to the rate of inflation.

The real value peaked in the late 1960s at the end of the Democratic Kennedy and Johnson administrations. It dropped during the Republican Nixon and Ford administrations, stayed about the same during the Democratic Carter administration, dropped for a decade under the Republican Reagan and Bush I administrations, ended the Democratic Clinton administration at about the same value as it started, fell during the Republican Bush II administration, and has risen during the Democratic Obama administration.

Not surprising that the Democrats try to keep the minimum wage a living wage, while the Republicans let its purchasing power fall.

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