the Minimum Wage Tide Turns

Last week, thousands of fast food workers protested across the country demanding higher salaries. The majority of them make the $7.25 per hour federal minimum wage, or a few nickels above it, and claim it’s way too low to earn a living.

Proponents of a minimum wage increase want the rate boosted to $10, even $15, per hour, depending on the location. Their demands sparked some to question whether a fast food worker should get such a wage for flipping burgers or frying potatoes.

Let’s set aside that argument for a moment and focus on the wage itself—which, in comparison to past minimum wages, is way behind the times and the spending power.

The first federal minimum wage, set in October 1938, was 25 cents per hour. Adjusted to 2014 inflation, that’s the equivalent of $4.22 per hour, more than $3 behind the current rate, and certainly nowhere close to a living wage by modern standards.

But by February 1968, the hourly minimum wage reached $1.60—the equivalent of $10.95 by today’s inflation rate. That’s approximately $3.70, or a whopping 51 percent, above the current $7.25 rate.

It’s hard to believe, but these statistics conclude that, at one point in this country, a fast food worker was essentially making something equal to $11 per hour by today’s standards.

What happened since 1968? The minimum wage continued going up periodically—it has never decreased—but its buying power weakened, and the government never adjusted it according to inflation and a higher cost of living. The $3 hourly minimum wage set in January 1980 had a buying power equal to $8.67 today; the $4.25 minimum set in April 1991 is worth $7.43 some 23 years later .

The job market also changed dramatically—and not for the better. Companies pursuing cheap labor pulled their industries and manufacturing plants out of the U.S. to other parts of the globe. The computer age ushered in a new era of efficiency, but enabled companies to hire fewer workers to do more work with greater ease.

Wages continue to plummet even in industries that pay well above the minimum, so more working class Americans are paid less for their efforts. Meanwhile, the so-called “job creators” at the top of the food chain aren’t living up to their title, as they either hold on to their fortunes or invest it elsewhere rather than boost wages, hire workers or expand their businesses here in the U.S.

Minimum wage positions outnumber higher wage industrial and manufacturing jobs. Rather than trying to get companies to return home, or pave the way for new industries to develop prodigiously here, the government chooses to do neither—for fear of ticking off certain voters or the special interests that fund their campaigns.

It would be foolish to boost the hourly minimum wage by $3 overnight, as the sudden payroll increase would harm small businesses. Raising the hourly wage by a buck a year over three years isn’t perfect, but it would help the preponderance of minimum wage workers catch up with modern times and expenses.

A higher minimum wage would pump money into the economy, as it would enable workers to spend and save more of their income. It would also boost federal, state and city coffers through increased revenue from various payroll taxes—and reduce low-wage workers’ dependency on government benefits to make up for income shortfalls.

Increasing the minimum wage would lift many boats with the tide; we must make sure, however, the increase doesn’t capsize any ships.

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