The Fair Minimum Wage Act of 2013 (H.R. 1010 in the House and S. 460 in the Senate) is a bill that would increase the minimum wage from its current $7.25/hour to $10.10/hour over the next two years. After that point, the minimum wage would automatically increase to keep pace with inflation — the tendency of currency to be worth less as time passes. Tracked by the Consumer Price Index, inflation means that what a $1 dollar bought in January 1977 would take $4 to buy now. Sure, the minimum wage was “just” $2.30 back in January 1977, but what $2.30 could buy in January 1997 would take more than $9 to buy today. Because the minimum wage is $7.25, economists say that the minimum wage has declined in “real value” between 1977 and today.
1977 didn’t even mark the high point for the U.S. minimum wage in real value; the minimum wage reached its peak in 1968, when workers were guaranteed a wage that would buy what $10.67 would buy today. The following graph summarizes Consumer Price Index data from the Bureau of Labor Statistics to show how the real value of the minimum wage has fallen since then.
Despite support by 162 members of the House and Senate, leadership of the 113th Congress has allowed these bills to languish in committee. Meanwhile, the real value of the minimum wage continues to fall. In January and February of 2013, the real value of the minimum wage dropped 8 cents an hour from its 2012 average. That may not sound like much to you if you have a high-paying job, but for someone on minimum wage that’s a drop of more than 1% in pay over just two months. Over a 40-hour work week, that drop means a minimum wage worker lost the ability to buy one inexpensive breakfast. By April, another meal will be out of reach. When will Congress act?
P.S. Before someone says that American business can’t afford to pay its workers, consider this: while America’s minimum-wage workers lost their breakfast, corporate profits soared. The latest available report from the Bureau of Economic Analysis reveals that in the 3rd quarter of 2012, corporate profits rose by 7.5%, a gain of $45.7 billion.