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This is What Minimum Wage Would Be If It Kept Pace with Productivity

Summary:
If the minimum wage had kept pace with inflation since 1968, it would be close to an hour today, more than 65 percent higher than the national minimum wage of .25 an hour. While this would make a huge difference in the lives of many people earning close to the national minimum wage, it ...

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If the minimum wage had kept pace with inflation since 1968, it would be close to $12 an hour today, more than 65 percent higher than the national minimum wage of $7.25 an hour. While this would make a huge difference in the lives of many people earning close to the national minimum wage, it is actually a relatively unambitious target. 

Until 1968, the minimum wage not only kept pace with inflation, it rose in step with productivity growth. The logic is straightforward; we expect that wages in general will rise in step with productivity growth. For workers at the bottom to share in the overall improvement in society’s living standards, the minimum wage should also rise with productivity. 

This is an important distinction. If the minimum wage rises in step with inflation, we are effectively ensuring that it will allow minimum wage earners to buy the same amount of goods and services through time, protecting them against higher prices. However, if it rises with productivity that means that as workers are able to produce more goods and services per hour, on average, minimum wage earners will be able to buy more goods and services through time.

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