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by Tondoteottotote on January 29th, 2006

Tondoteottotote

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The current minimum wage of $5.15/hour was set in 1997. If it was adjusted for inflation, what should the minimum wage be in 2006?

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  • by mdamone on February 4th, 2006

    mdamone

    Tough to answer even using modern economic formulas for future value of money, because:

    1. Minimum wage does not exactly track ('index') inflation. It is only adjusted (raised) periodically in reaction to rising cost of living factors. Inflation is only part of cost of living calculations, but it has gone up since 1997 (it was 2.35 in 1997 and is at 3.5 as of January 2006).

    2. Federal minimum wage is not the same as local minimum wages. States (and even cities!) can and do set their own minimum wages. For example, you know what the federal minimum wage is, but did you know that Santa Fe, New Mexico has a city minimum wage of $9.50 currently?

    3. It is hard to say what minimum wage 'should be' in 2006 because only Congress can decide what it 'should be' (federal minimum wage). Politics play a big part in decisions. 1997 to 2006 has been the longest period since a federal minimum wage was first established that it has not been adjusted.

    Some claim we are do for a federal increase, others say we are not. Not all those who study minimum wage even agree that raising it would help things like poverty levels. Raising federal minimum wage is a long, complex politcal process.

    The term 'living wage' is becoming popular these days instead of 'minimum wage.' Living wage is what some experts have calculated based on a typical family's costs to live. This is usually higher than minimum wage and different 'experts' calculate this formual in different ways.

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