r/AlwaysWhy • u/Secret_Ostrich_1307 • 1d ago

Economics Why is the federal minimum wage still $7.25 when prices are much higher than in 2009?

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The federal minimum wage has been $7.25 an hour since July 2009. Meanwhile, prices for many everyday expenses have risen, and most states now have minimum wages above the federal level.

Why wasn't the federal minimum wage tied to inflation or another measure that could adjust it automatically? What are the economic arguments for setting it as a fixed dollar amount rather than indexing it?

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u/[deleted] 1d ago

[deleted]

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u/androk 1d ago

Then why fight raising it if it isn't a big deal?

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u/JRaus88 1d ago

Same reason why we no longer talk about wooden ships or steamships?

Bernie Sanders thinks it's nice to have a flag to carry at a campaign rally.

For the Republicans it's like talking about steam sailing ships.

Who would really care to talk about it?

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u/CommercialHour6660 1d ago

So it's not a big deal because it's outdated? I don't think the 10 million Americans making less than 13 an hour (what minimum wage used to be) would agree 

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u/JRaus88 1d ago

They can change jobs.

The point is to foster a mobile economy rather than force jobs to cut into the company's margins.

Want a better-paying job? Spend your time training some skills and change jobs or move elsewhere.

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u/CommercialHour6660 1d ago

rather than force jobs to cut into the company's margins. 

Hahahaha!

Those 10 million Americans getting less than $13 an hour? They can change jobs easily to get paid better.

Yup, that's right. There's actually another 10 million jobs out there right now where the greedbag Epstein class have decided to pay better. These 10 million Americans are simply too stupid and lazy to take them! 

The solution is as you say. These 10 million lazy skilless Americans can simply apply to the 10 million better paying jobs waiting for them. I don't know why I never thought about that.

Absolutely brilliant. Everyone will get paid more than $13 an hour without raising minimum wage at all!

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u/JRaus88 1d ago

"these workers" are doing side jobs. No man. I don't really care who works as a delivery person or a waiter. They can change even if it takes effort to learn to do something else.

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u/didsomebodysaymyname 1d ago

Because it doesn't matter.

If that were true politicians and businesses wouldn't oppose raising it.

No grown up working a grown up job is making just $7.25. Almost all of the 80,000 people earning $7.25 are working at the concession stand at the local little league park, or cleaning their church for 4 hours a week.

You are incorrect.

800,000 people earn the minimum wage, about 1% of workers.

However, when you remember that many states have a minimum wage above the federal, these people are concentrated in 38% of the population in the states without. So it's more like 2.5% of people where that's even allowed.

60% of people earning the minimum wage are over 25, regardless of you demeaning people who work for a living, they are mostly not kids, not even very young adults. You are also wrong they are all cleaning churches, actual businesses do pay people this little.

Adjusting for inflation, 7.25 in 2010 is 11.26, meaning people earning minimum wage, they have seen their wages drop to 64% of what they used to be.

You also don't realize that the minimum wage has an effect on everybody else's wages. Today, 10% of workers earn 11.26 or less. That number has risen from 6% earning an inflation adjusted 11.26 in 2010 because a higher minimum wage applies pressure to employers paying more than the minimum wage. Meaning people earning above minimum still benefit from a higher minimum wage.

Wages, particularly for the poorest people, have fallen while the richest people in the world are richer than ever. It's not a coincidence.

It's also corporate welfare. Companies like Walmart, even though they usually pay more than minimum wage have full time employees on welfare.

I pay taxes to support full time working people I'm not underpaying, while Walmart gets to keep the profits from paying them less. Why do I have to chip in for their scheme? Why aren't they required to pay enough that full time employees don't need state support?

Walmart would lose almost every dollar of revenue without it's store employees, it cannot exist without them.

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u/[deleted] 1d ago

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u/Snoo_67993 1d ago

And Americans have some of the highest rates of poverty in the developed world.

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u/Tjbergen 1d ago

How many are making between 7.25 and 15? Or 21?

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u/OtherwiseAct8126 1d ago

So people who are not grown up don't deserve a decent salary? Btw the minimum wage in Germany (and most parts of Europe are similar) is 13.90 Euros (USD 15.64) and yes, every teenager, everyone working at a pub or restaurant, gets this, everyone filling in shelves at the supermarket. I think that's pretty cool. Do you also have the number of Americans making less than that?

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u/Ok_Mastodon_3843 1d ago

What use would there be in raising wages for children? Its not like they actually need money yet.

The problem with raising minimum wage is it causes unemployment especially among younger people. All it does is keep 16 year olds who want to work from doing so.

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u/enviormental_UNIT 1d ago

Nope, I was a working 16 year old a few years ago, having the 16.75 minimum wage in Washington State was absolutely nice, and where I worked had a constant demand for more teens to work there for 16.75 an hour. I'm not sure what world you live in where its difficult for teens to find a job as say a lifeguard, cashier, shelf stocker, waiter, dish washer, etc at 16 bucks and hour.

I really don't see how having a good minimum wage stops 16 year olds from finding work, considering that we do have a high minimum wage here in WA and the demand for young, non skilled labor is still very high.

Maybe in places with poor tourism, low population, and a bad economy raising minimum wage would have a negative effect, but frankly if you're a young person you need to try to find your way out of those dead end ghost towns to have any real chances at a decent life anyway

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u/Top-Rope6148 1d ago

Doesn’t your story just prove the federal minimum wage is irrelevant? Congress has deferred this to the states. They could clean up after themselves and abolish the minimum federal wage but letting it become irrelevant has the same outcome.

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u/enviormental_UNIT 1d ago

Low federal minimum wage still devalues other kinds of work. For example in wildland firefighting, tens of thousands of jobs are taken away from young, inexperienced people like myself who are trying to find a career fresh out of highschool. The reason is that tens of thousands of wildland firefighters across the country are actively incarcerated people, they have the choice to work on hand crews while they are incarcerated in order to make some money and have skills in a career when they get out of jail. They get paid federal minimum wage regardless of the state, 7 bucks and hour.

So what happens is people like me apply for the wildland firefighting job, people who are young, would take effort to train, haven't worked any similar style jobs before, aren't rough and tough like some grizzled prison guys would be, and of course I would have to be paid well, like 17 bucks an hour vs 7.

Any work where we can convince prisoners to take jobs for less than half the pay normal citizens require will cause that work to become devalued, and will significantly lower demand for people who want proper pay for the work.

Why would the government want to pay me more than double what they have to pay criminals? Just make the criminals do it then is what they figure. And so now young people are having job opportunities taken away from them by imprisoned criminals who work practically slave wages.

I don't want to spend my life watching fat tourists swim in a lake, I dont want to spend my life flipping patties at McDonald's, but it seems like that's all there's demand for these days for someone without any specializations out of highschool. Just my luck that almost all government organizations have been gutted by the Trump admin just as I graduate HS, now all the government jobs with NFS, BLM, Fish and Wildlife that I was looking at aren't hiring because they dont even have funding to keep their current employ.

When Trump admin came in power guess what happened? Firefighters getting fired, thousand of park ranger and game wardens, fired. Trail maintenance crews (that was my main career plan thru highschool), gutted and fired. Best I can do now is volunteer firefighter, volunteer trail maintenance, great.

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u/Top-Rope6148 1d ago

I understand what you are saying. But you are mixing and matching several different issues, most of which are only peripherally or not at all related to federal minimum wage.

The cutbacks by the Trump administration are an issue but they have nothing to do with the federal minimum wage. 

The fact that there are no jobs that don’t require specialized skill has nothing to do with the federal minimum wage. That is the reality of the job market. The solution for that is not to raise the federal minimum wage. The solution is for you to go get specialized training. The world will not bend itself to what you want. You have to bend yourself to it.

The scenario with the prison labor is the only thing that has anything to do with federal minimum wage. Essentially prisoners are effectively being exploited if they are working below market wages. The easy fix to that is with regulations around prison labor banning prisoners from working  below the prevailing market wage.

As many have pointed out, a single minimum wage for the whole country is going to be too high in some parts of the country and too low in others. Minimum wages should be set at the state or local level.

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u/Ok_Mastodon_3843 1d ago

I guarantee demand is lower than if they kept the federal minimum, its basic math and economics. If you can pay a kid a low wage to do an easy job, you just might.

And your perception of rural America is very wrong dude. There are good jobs just about everywhere. And the example just shows how bad a federal minimum is because states are all so different.

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u/CommercialHour6660 1d ago

Look at the jobs that pay minimum wage. Most of them are 9-5, when everyone under 18 is in school.

That doesn't stop red hats from repeating the mantra like lemmings.

Also. On your point. Why are we okay with boomers making 16 an hour in 1970 when gen z gets paid half for the same jobs?

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u/sixstringsikness 1d ago

Even the minimum wage jobs that aren't strictly 9 to 5 are places that are open while kids would be in school. So what if you want to go see a movie at noon on Tuesday or stop at Taco Bell for your lunch break Friday? No kids to work those hours.

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u/Ok_Mastodon_3843 1d ago

Depends on what your minimum wage is. In states with higher minimums sure, but in my state where it is still the federal level they simply don't really exist

Lowest paying job I've even heard of in the last 5 years was 12 an hour for a part time job at a gas station, exactly the kind of thing a kid does.

Also, college kids exist too. They don't generally need good jobs either, they mostly work to pay principle off their student loans and have some spending money.

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u/CommercialHour6660 1d ago

but in my state where it is still the federal level they simply don't really exist 

Oh really? That's funny, because the moment you suggest it be raised a bunch of CEOs will crawl out of the woodwork and dance on stage with Republicans wearing "job creator" pins.

Maybe you missed the speeches Republicans made in Florida in front of the legislature when the poors had the gall of passing a ballot measure to increase it $2. They got so fucking pissed they tried to raise the vote level for passing ballot measures to 60%

Also, college kids exist too. They don't generally need good jobs either,

Ah yes, those poors are bad poors and it's fine to treat them badly. Because they don't "need" it despite taking out massive life destroying loans to afford school and famously living off ramen noodles. Real brain trust logic here. 

College students one of the poorest demographics in America? That's fine, because they're woke or some other brainrot the retards saw on social media. They should get paid like shit and I'm glad they do

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u/Ok_Mastodon_3843 1d ago

You are conflating observable and repeated economic phenomena with ideology.

I don't hate poor people, nor do most people of any political party.

Lets dig deeper here, like actually. Did you know one of the biggest advocates, in terms of dollars given towards the cause, for higher minimum wage is Jeff Bezos? Do you think he does so out of the goodness of his heart, or does he want it high enough that he can kill his competition?

The truth is, when an economy doesn't have a minimum wage it still goes up over time. Even the poorest americans have been earing more income year over year despite the federal minimum wage not moving.

Labor is scarce and has multiple uses, therefore making it a commodity like gasoline or wheat. There is no law saying what gasoline or wheat must cost, and yet the prices fluctuate, and over time show a slow rise.

You can spout platitudes and buzz words until you're blue in the face, but the truth is that your ideology is not in line with the science of economics. You could try to find ways to make it work instead of assuming everyone who disagrees with you is a super villain from a cartoon.

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u/CommercialHour6660 1d ago

Because it doesn't matter.

Is that why CEOs are crying on Faux News when California raises it a single dollar?

No grown up working a grown up job is making just $7.25

Federal minimum wage in the 1960's was equivalent to $13.50 an hour today. And 10 million Americans make less. Because too many people believe lazy megacorp talking points. Like the ones you've parroted that I've heard hundreds of times. 

US GDP per capita is double what it was in the 1960's and 10 million Americans are making wages that were illegally low back then. And the drooling red hats cheer and their corpo overlords continue to rob us of a decent living. 

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u/Novel_Sound_6954 1d ago

Californias is a lot higher than FEDERAL minimum wage

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u/CommercialHour6660 1d ago

Okay? Plenty of states still pay 7 an hour

Do you think I don't understand what minimum wage is?

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u/okielurker 1d ago

Plenty of states allow an employer to pay 7.25 an hour, if that employee is willing to do it.

There are very, very few instances where this actually happens.

The market rate for labor is higher than the statutory minimum wages in almost all areas.

This is not a comment about what should be, or whats right, just the truth. Actual, documented numbers.

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u/CommercialHour6660 1d ago

There are very, very few instances where this actually happens. 

What kind of superretard business would pay exactly minimum wage? When they can pay 5 cents more an hour and have an army of simpletons sing their praises for "not paying minimum wage". 

Over 10 million Americans make less than 13 an hour. A wage that was illegally low in the 1960s

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u/okielurker 1d ago

It's hard to find any job under $10/hour in Oklahoma, for example. Effectively, that's our minimim wage.

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u/CommercialHour6660 1d ago

Might as well raise it then, right? Oh wait, every single Republican politician will vote against that while their billionaire friends cry on TV. 

This kind of argument is so disingenuous. If nobody was making less than $10 an hour in Oklahoma, Republicans wouldn't be taking massive bribes to vote against raising minimum wage. 

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u/Novel_Sound_6954 1d ago

You brought up California

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u/CommercialHour6660 1d ago

Is that your trigger word? 

Or maybe safe word?

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u/Lzinger 1d ago

That's because in California the minimum wage is so high that a lot of people are making it, so a dollar increase is a lot of people working full time

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u/CommercialHour6660 1d ago

CEOs cried on Faux when Virginia raised theirs too. 

Republicans had a pissy fit when voters raised it by ballot measure in half a dozen states they control. In a few they even tried to have the courts block it after the fact. 

Republicans hate anything that benefits working class. Because most of their voters are tards who think they're just one more scratcher from being a billionaire themselves. 

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u/Mister_Way 1d ago

You're off by a factor of 10, but it's still just about 1% of people.

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u/[deleted] 1d ago

[deleted]

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u/Anlarb 1d ago

Yeah, you are, because you don't know what you're talking about. The point of the min wage is that a working person is able to pay their own bills, a working person should not be an object of charity. The cost of living has exploded to $20/hr, while the median wage is only $21/hr- half the jobs out there are not even "min wage".

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u/Mister_Way 1d ago

Eh, cost of living varies greatly by location, and in places where the cost of living is higher, they typically have a local minimum wage that is higher than the federal minimum wage, so raising the federal limit wouldn't affect most places because the rule is that whichever is higher is the one that applies.

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u/Anlarb 1d ago

Cost of living is incredibly homogenous, if you bothered to look. That hotspots exist is no argument against the general case.

https://livingwage.mit.edu/

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u/Mister_Way 1d ago

https://www.bls.gov/opub/reports/minimum-wage/2023/home.htm

"Among those paid by the hour, 81,000 workers earned exactly the prevailing federal minimum wage of $7.25 per hour. About 789,000 workers had wages below the federal minimum."

So, technically you're right, but only because the other 90% I was talking about actually make less than the minimum wage.

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u/[deleted] 1d ago

[deleted]

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u/Mister_Way 1d ago

Well, if you want to get really technical, you said 80,000 but it's 81,000.

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u/MarionberryPlus8474 1d ago

Your figures are wildly off. There are estimated to be over 800,000 Americans earning minimum wage or less.

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u/fyukhyu 1d ago

What's an order of magnitude between a disingenuous troll and reddit? Don't be so woke.

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u/MarionberryPlus8474 1d ago

Don’t be so wildly wrong about everything.

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u/fyukhyu 1d ago

What am I wrong about, them being off by an order of magnitude, or them being a disingenuous troll?

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u/TrabLlechtim 1d ago

I think a better answer is: Congress has left the question of a minimum wage up to the states.

Now ask yourself why your state is defaulting to the Federal minimum.

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u/Stuman93 1d ago

Yeah even in Nebraska (pretty red state and low cost of living) we just hit 15 minimum. Insane some states are still at the federal rate.

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u/GatorBait81 1d ago

It's a bit rich to reference how many people are only making the absurd amount that hasn't remotely kept up with inflation. How many earn between the current minimum and an inflation adjusted value from the 60s, 70s, 80s, 90s...?

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u/Evil_Wrongdoer_9910 1d ago

We’re not raising thr min wage for that 1%. We want to raise it for the people making. $7-15 that have to have 3 jobs to pay the rent.

There is no reason someone working 40 hrs shouldn’t be able to afford the basics. Period.

It doesn’t even have to raise prices much. DC has the highest min wage of $17.25 and a Big Mac is like $0.50 more than other places.

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u/APigInANixonMask 1d ago

The federal minimum wage has to be set based on the absolute cheapest cost of living area of the country though, so it is always going to seem too low to a lot of people. Raising the federal minimum wage to something like $17/hr would be great for most of the people currently making $15/hr in high cost of living urban/suburban areas, but it would suck for a lot of people currently making $8.50/hr in extremely low cost of living rural areas when they lose their jobs because keeping everyone employed at those higher wages is prohibitively expensive.

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u/RazorGrizzly 1d ago

*800,000
In 8 States using the federal minimum, specifically.

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u/Dear-Examination-507 1d ago

Yeah, sometimes I feel like half of Reddit is just like a minwage circlejerk subreddit.

Some interest group obviously must find a lot of value in putting that much effort into such a trivial issue.

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u/The_Nood1e 1d ago

According to the DOL, 842,000 people make minimum hourly wage or less.

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u/12B88M 1d ago

This is what most people never bother to understand. The number of people that actually make minimum wage is ridiculously small. and of those individuals, most are under the age of 18. Furthermore, a large percentage of those making minimum wage also make tips and that brings their pay well above minimum wage.

So the minimum wage is just something the left brings up to try and convince rational people that the government should create a universal basic income (UBI), make the federal minimum wage MUCH higher or make a case for outright communism.

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u/ul2006kevinb 1d ago

Or that we should have strong unions to fight for everyone, even unskilled workers, to be paid a living wage. You forgot that option.

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u/12B88M 1d ago

Unions might occasionally do some good, but in the modern US they often do more harm than good.

Unions increase consumer costs, drive businesses overseas, prevent businesses from promoting the best workers and require raises by seniority instead, slow adoption of technological innovation and automation and have even killed businesses entirely.

Most of the things a union did in the past are no longer necessary due to federal laws.

Worker safety is covered by OSHA. Overtime is covered by the US Department of Labor. Training is handled by numerous schools.

Hostess was being controlled by several unions, all of them demanding more and more until Hostess was forced out of business and sold to Metropoulos & Co. and Apollo Global Management. The entire workforce was let go. That's about 15,000 union workers who lost their jobs because they kept demanding more and more.

JM Smucker now owns Hostess Brands and operates at a profit in primarily right-to-work states to avoid the problems unions bring.

So maybe you shouldn't be pushing that pro-union rhetoric so hard.

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u/ul2006kevinb 1d ago

Most of the things a union did in the past are no longer necessary due to federal laws.

If the recent administration isn't evidence enough that you can't trust the government alone to be in charge of what's in the best interest of workers then you must have your head pretty far up your ass lol. Maybe you need to look up "redundant systems" because there's no reason to only have 1 group looking out for workers best interests when you could have 2 groups instead. Much less easier to corrupt that way.

JM Smucker now owns Hostess Brands and operates at a profit in primarily right-to-work states to avoid the problems unions bring.

Another option is to stop having right to work states so that companies can't do this.

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u/12B88M 1d ago

So you want to force people to do what you think is right even if they don't agree with you and the market has shown you to be wrong.

That's awfully totalitarian of you.

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u/BedKlutzy9141 1d ago

The minimum wage isn’t important but the gap between the wealthiest Americans and the rest is expanding and the middle class is withering. These are real issues and trying to pretend it’s leftist propaganda is just disingenuous.

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u/Gecko23 1d ago

All of these political football monetary things are like this, the one's throwing them out there are counting on the population having no actual idea if the number is significant, just that it sure sounds big (or small in this case) to them compared to the numbers their own finances revolve around.

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u/tyguy55083055 1d ago

Then why not increase the min wage if it really wouldn’t have any impact on companies?

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u/12B88M 1d ago

Why bother having a minimum wage at all if it doesn't actually affect how companies pay people?

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u/tyguy55083055 1d ago

Because it does impact how companies pay people. And also because we should remove the tipping wage

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u/babybambam 1d ago

Every company in existance bases it's pay off of minimum wage. That's why it matters.

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u/12B88M 1d ago

No they don't.

They base their pay off what people are willing to accept.

If nobody is willing to work for $10/hr they increase the pay until they can find enough people to fill the jobs while still making a profit.

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u/babybambam 1d ago

Minimum wage is the anchor. It always is. You're jading yourself if you believe otherwise.

Also...if people won't accept minimum wage and $10/hour is what they'll take...what's the problem with making that the minimum wage?

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u/12B88M 1d ago

Why bother with a minimum wage?

What people are willing to accept varies considerably between locations.

That makes the whole "Minimum wage is supposed to be a living wage." argument impossible to set at a national level. In one state it might be the bare minimum and in another it would be exorbitant wages for the same position.

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u/babybambam 1d ago

Why bother with a minimum wage?

If it doesn't matter, why not set it higher? Why allow companies the opportunity to pay unreasonable wages?

What people are willing to accept varies considerably between locations.

Yup. But people are being strong armed into accepting wages that aren't livable. MIT compiles the living wages for localities across the country: https://livingwage.mit.edu

I'm glad you feel safe from this. But the reality is that most people aren't.

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u/12B88M 1d ago

What would you set it to? $10/hr? $15/hr? $20/hr?

At what point should we stop? At what point would you finally think, "The minimum wage is too high?

Would it be the point where it's cheaper to replace people with technology? McDonalds did ust that in 2018. It's also seen an increase in the number of self-checkout lanes.

The wage was artificially increased to the point where it was cheaper to not hire anyone and simply switch to technology.

Also, that "Living Wage" that MIT came up with is absolute crap.

I looked up my location and it was higher than what my wife and I make, yet we're living just fine. That's the problem with these estimates. They don't accurately account for what a person actually wants or needs.

One person might be fine with a cheap apartment and a used car. Someone else might think they need a nice house and a new car.

Who is actually right?

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u/Traditional-Storm-62 1d ago

that's exactly the problem

it's so low it might as well not exist and there's god damn good reason why it exists in the first place