Released September 8, 2009
RALEIGH, N.C. -- The federal minimum wage was increased to $7.25 a couple of weeks ago. This means it has increased by $1.75 an hour in the past three years. But does this necessarily mean the minimum wage is at an all-time high?
Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
No, it does not. Actually, unlike many government programs - and the one that comes to mind is Social Security - the minimum wage does not automatically get adjusted for inflation. People who receive Social Security, for example, do get a bump in their payments each year based on the inflation rate. That does not happen with the minimum wage.
Congress and the president have to pass legislation specifically changing the minimum wage. The good news right now for minimum wage earners is that since this latest increase has been implemented, when you adjust the minimum wage to account for inflation, it is now at its highest level in more than 25 years. The bad news, however, is that it is lower than it has been in some previous years, specifically between 1965 and 1982, the minimum wage was much higher. Indeed, if you look at the minimum wage in 1968 and calculate a comparable level today, we would have a minimum wage of about $9.
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http://www.ncsu.edu/project/calscommblogs/news/archives/2009/09/economic_perspe_442.html
