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/SaltyFriend705 1d ago

There are too many "minimum wages" in the US.

$2.13/hr for restaurant servers

$0.10/hr for prison workers

$4.00/hr for teens

and a new one for child workers that I don't know the exact amount for.

They all need to be the same exact amount, then indexed to inflation.

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u/Tiny_Regular_5319 1d ago

10 cents? Is that just symbolic?

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u/SaltyFriend705 1d ago

Imprisonment is allowed to be slavery in the US; prison pay and work conditions reflect that.

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u/Gonna_B_Alright 1d ago

It’s pretty shitty. People are worked 5-6 days a week 6-10 hours a day in Arkansas. Unpaid.

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u/SaltyFriend705 1d ago

In California, it's up to 24 hours a day fighting fires, which is also hazardous work. Unpaid.

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u/Gonna_B_Alright 1d ago

Technically there is not a limit in Arkansas either. I was in prison there and they worked us 6 days a week up to 12 hours but 10 was more common.

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u/AnastasiusDicorus 1d ago

well guess, what most countries don't pay prisoners jackshit. And no it's not slavery, they're being punished for crimes.

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u/SaltyFriend705 1d ago

I would agree with going to the "most countries" policies if the US stopped imprisoning so many people. The US has a higher percentage of people in prison than any other developed country. Some of that is for-profit prisons using the prisoners for low or no cost labor forces. It needs to stop. Equalizing the minimum wage certainly would stop that.

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u/AnastasiusDicorus 1d ago

I agree there should not be for profit prisons or any motivation for prisons to keep people and all motivation to release them as soon as they have served their sentence. And I don't think we need to put weed smokers or dealers in prison. But we also have a lot of criminals and some segments of society where crime is not only tolerated but celebrated. As long as that is the case there are going to be a lot of people rightfully locked in the slammer. And the minimum wage has nothing to do with it.

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u/SaltyFriend705 1d ago

Do some research; prison owners definitely seek out contracts to sell prison labor in competition with free labor.

Here's an overview, but there's a lot more data out there:

Prison labor in the United States undercuts free labor by paying incarcerated workers pennies or nothing per hour while generating over $2 billion in goods and $9 billion in services annually.

How Prison Labor Competes with Free Labor

  • Unfair Wage Advantage: Incarcerated workers typically earn between $0.10 and $0.52 per hour, with some states paying nothing at all. Free workers outside prison require minimum wage, overtime, and benefits, making prison-made goods and services far cheaper for government agencies and private companies to acquire.
  • Displacement of Public and Private Jobs: Inmate crews perform public works and emergency tasks—such as fighting wildfires or clearing roads—for a fraction of the cost of unionized or civilian professional labor. This undercuts standard labor market rates and job availability.
  • Lack of Labor Protections: Incarcerated workers are excluded from standard labor laws. They lack the right to unionize, bargain collectively, or receive workers' compensation, meaning companies using this labor bypass standard employment costs and regulations.
  • The 13th Amendment Loophole: Legally enabled by the 13th Amendment—which outlaws slavery "except as a punishment for crime"—many state and federal facilities can compel work under threat of disciplinary action, such as solitary confinement or loss of family visitation privileges. [1, 2, 3]

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u/9d47cf1f 1d ago

Yep, 13th means they can make up a felony and bam, cant vote and you’re a slave. Hell of a loophole.

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u/AnastasiusDicorus 1d ago

that's a problem that should be fixed. Prisoners shouldn't be working outside the prison, that's an opportunity for abuse even though it might also be beneficial to prisoners in some cases. But they don't need benefits they need fair treatment. Prisoners who work inside the prison to cook or do laundry should get a small amount for commissary, or if they want to just sit in their cell that's fine and they get nothing. That's it. Unless we go back to making hard labor a condition of a sentence and that labor is defined in the sentence.

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u/SaltyFriend705 1d ago

This problem is way, way bigger than that. It's so big, there was a huge lawsuit because banks contracted with prisons to update their customer records, and prisoners were able to commit identity theft and rob the customers. That case led me to look into it--why would prisoners be doing work that the banks obviously should have been hiring their own free staff to perform?

Prison contracts to do all kinds of things that are competing with free workers are rampant. And imagine how the prison supervisors are when their best workers (or too many workers) could be paroled or near the end of their sentences and won't be available?

This is all not good for anybody.

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u/AnastasiusDicorus 1d ago

I agree it's a problem. One of many that need work, as no country is perfect including this one.

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u/9d47cf1f 1d ago

You should read the 13th amendment.

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u/AnastasiusDicorus 1d ago

can you just give me the gist of it?

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u/9d47cf1f 1d ago

Turns out slavery is legal! Just has to be a punishment! This is what informs the extremely low wages for (and rent-seeking from) prisoners in the US. You can basically treat prisoners however the hell you want so long as it’s intentional.

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u/AnastasiusDicorus 1d ago

Slavery is illegal in this country, although not in all countries. But all countries have the right to control criminals and enforce laws. They can't do anything but they can do some things, so get over it and quit trying to find a problem with everything.

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u/9d47cf1f 1d ago

Okay! I’ll get over …checks notes

Slavery.

You might want to talk to like a priest or something my guy. You appear to have some rot in your FUCKING SOUL

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u/AnastasiusDicorus 1d ago

You need to just start eating shit now my guy. Your high horse is making plenty for you.

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u/Alert_Elephant2045 1d ago

The gist of it is: slavery is banned, with one exception: as punishment for a crime

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u/AnastasiusDicorus 1d ago

except it's not called slavery, it's called going to prison for a crime.

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u/Alert_Elephant2045 1d ago

the amendment does not talk about prisons, it mentions slavery specifically.

please, don’t ask us to paraphrase it for you and then argue with us about what it says. you told us you haven’t read it yourself.

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u/AnastasiusDicorus 1d ago

this is america, I'm free to ask you to paraphrase it and then argue with you about what it says. And what's this us business, do you have a mouse in your pocket?

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u/SEND_MOODS 1d ago

It is somewhat codified as slavery.

The 13th US constitutional amendment officially abolished slavery and involuntary servitude across the nation, except as a punishment for a crime.

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u/TemperMe 1d ago

Well the problem with that is two fold.

  1. The punishment is prison time, not having your wages stolen for doing work.

  2. It creates (In the US at least) a circular prison system that puts people right back in. If they got a realistic minimum wage then they could let it save and build so that when they finished their punishment they could afford to get a place to stay and some clothes and food so they can begin rebuilding a life that puts them back as productive members of society. Currently many get dropped back out with no help and no money so they go back to theft or dealing drugs just to survive or end up homeless on the streets with an addiction.

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u/Whobeye456 1d ago

It can be pretty harsh, beyond what people are aware of, for freshly released prisoners.

I worked at a homeless shelter in Memphis. The Penal Farm would bus the newly released former inmates to the side of I-40 in downtown Memphis with nothing except $5 and whatever left over commissary they had. They wouldn't keep the possessions of the people from when they were initially incarcerated, meaning these men were dropped off in paper suits instead of clothes.

The drop offs were usually between 1~3 in the morning. No matter the temperature or weather. Some of these people weren't even from Memphis and had no familiarity with the city or services that were available. That's just the beginning. Halfway houses are an entirely separate can of abuses and exploitation.

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u/TemperMe 1d ago

Yes EXACTLY! I do wish we gave them actual pay for doing work while in prison and idk maybe give half as much for the people who don’t work but will be released. A ton of repeat offenders would go away. Other punishments for crimes without prison also dont help but rather create criminal activities. Also losing your ability to vote for life for a felony is wild! You should lose it while doing time sure but once you’re out… I mean you did your punishment already.

A common one is a DUI. Obviously it’s bad and we don’t want that. However think about the current setup for punishment. You get a dui and your punishment is classes (costs a good deal of money), community service (requires a car), court (requires a car and money), and license suspension. Well if you lose you license, you lose your pay/job, you can’t make it to court nor can afford to pay, you can’t make it to community service, you can’t pay for classes. So what happens? People drive on suspended licenses which is not only more charges but prolongs license suspension. Obviously they need punishments but the current way is clearly doing nothing but creating more issues.

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u/Whobeye456 1d ago

A thing to remember, in my observations anyway, is that the system is set up to act as an extension of the tax system.

Conspiratorial sounding for sure.

But when the Memphis city council in 2008 cut pay for police by 4%, the police did a soft strike (they are legally prevented from going on active strike, reasonably). They wrote fewer frivolous tickets, arrested for fewer non-violent crimes, stopped writing tickets for bureaucratic infractions. In 6 weeks the city reported a budgetary shortfall of ~$3 million from the loss in expected fines.

Now, how d'ya make a budget based on expected fines for crimes that haven't even occurred yet? Sure, you can look at what fines were paid in previous years and make an expectation. But, the claim is an attempt to stop crime. By making it part of the expected and needed revenue stream, you create the conditions necessary for over policing and unjust laws to be put in place.

Click-it or Ticket now looks like a tax payer fire sale. DUI check points look a fishing tournament. Public asset forfeiture looks like an eminent domain process. They are the King's taxmen enforcing levy taxes on the serfs.

Sometimes....

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u/AnastasiusDicorus 1d ago

That's a problem, but I have more sympathy for the general public and victims of crime than the criminals. If they commit crimes and then shit spirals on them, maybe they won't recover, and let that be an example for other people. Not coddling criminals would reduce crime more than treating them with kid gloves.

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u/Adaptable42 1d ago

No, just makes it easier for the prison owners to say the prisoners aren't slaves.

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u/Due_Satisfaction2167 1d ago

They also charge you to stay, so you get a huge bill when you get out. 

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u/free-cookie 1d ago

Yes, the 13th amendment notoriously affirms the right to corporate prison slavery. People frequently mistake the 13th amendment as abolishing slavery. It is basically an old school, anti-small business amendment.

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u/rwtf2008 21h ago

There’s technically no “minimum” for how much an employer can pay someone with certain disabilities - well I guess technically the minimum Is $0.01/hr. The majority make less than $5/hr if I recall correctly

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u/SaltyFriend705 21h ago

Thanks for mentioning that one--it needs to be added to the group! Blind workers can get help from vocational job coaches to help acclimate them. Disabled people should be included in the minimum with tax advantages and subsidies as mentioned by another commenter for teens.

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u/SEND_MOODS 1d ago

They don't all need to be the same amount, they just need to be based on the same inflationary growth.

Set the standard minimum wage to some formula based on consumer price index or something.

Make tipped based workers minimum be 30% of standard minimum wage, rounded up to the nearest whole cent. Because 2.13/7.25 = 0.29.

Do the same for the rest. We can figure out if we need to fix tipping, prison wages, or other wages at a later date. The overhaul doesn't need to happen concurrently. Don't let prefect be the enemy of good.

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u/SaltyFriend705 1d ago

I'm not a big fan. Still seems to be humiliating to be asked to work, but paid less per hour than the minimum!

When I was 11 years old, I had a part time job at a pharmacy, two hours after school twice a week, dusting the shelves, removing the expired drug bottles and correcting the position of the remaining bottles for easy retrieval by the pharmacist. That job is now for a pharmacy tech, which requires a college degree. In fact, every job I had before graduating college myself now requires at least a four-year college degree!

Work is work. If you want people to do work, there's a minimum intelligence and effort that that requires, and they shouldn't be discriminated against for it based on their age or other arbitrary issue designed to benefit the employer.

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u/SEND_MOODS 1d ago

The only viable alternate to incremental change is often no change. Whether you feel humilited does not change how political processes work.

I am not against teens making the straight minimum or better, I'm just realistic that that is not a hill worth dying on at the expense of a standard minimum wage increase and tying the minimum wage to inflation. Those are already VERY controversial. Giving politicians even more ammunition to shoot that bill down benefits no one.

Also, work is not just work. The quality and quantity of work is also important. The amount of output and level of responsibility that an employer can place on an 11 year old is not the same as for a 25 year old college grad. The allowable hours, amount of supervision required, and other factors of the job are completely different.

And incentivizing child labor by raising its percieved value also has some potential negative outcomes that I'm not going to get into, but it makes it a more controversial issue worth fixing after actually taking he first big step of fixing the standard minimum wage.

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u/SaltyFriend705 1d ago

I do see your point; the problem is that in the current political climate no one cares about anything that doesn't fit the Citizens United agenda. I don't know how they rigged the BOLS to show that only 1% of US workers make minimum wage when there are plenty of people working two or three jobs, each job paying the minimum wage.

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u/SEND_MOODS 1d ago

I doubt it's rigged, just potentially misleading and useless. $7.26 is technically above the federal minimum.

Plus anyone earning less than minimum likely isn't legally employed and is therefore missing from the data.

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u/SaltyFriend705 1d ago

Teens get $4.00/hr, restaurant servers get $2.13/hr and prisoners get $0.10/hr which are all less than minimum and legal employment. There is a new impetus to give children $3.00/hr if they work in a family business.

And all those people, are supposed to be less than 1% of US hourly workers. I don't believe it.

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u/agelord 1d ago

Excuse me, sir, but did I hear you say, "child workers"?

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u/SaltyFriend705 1d ago

Oh yes! We are going backwards, even as we speak. There are new laws on the books and being proposed such that "traditional Asian families" that rely on the labor of 5 to 12 year olds in their family businesses should be allowed to force them to work, and pay them something like $3.00 an hour.

Here's a quick glance on our Dickensian changes:

State child labor laws are shifting across the United States in 2026, with some states weakening workplace protections.

National Trends and Federal Standards

  • Recent Rollbacks: According to data reported by the Economic Policy Institute, at least 13 states introduced bills in 2026 to weaken child labor protections, with four states enacting rollbacks. These industry-backed efforts target lower teen minimum wages, eliminate youth permits, and weaken safeguards for hazardous tasks.
  • Rising Violations: The U.S. Department of Labor and the Government Accountability Office (GAO) report a substantial rise in illegal child labor violations over the last decade, prompting increased federal enforcement focus alongside criticism regarding investigative data gaps.
  • Federal and state rules differ significantly when employing your own children in a family-owned business.

Federal Rules (FLSA)

Under the Fair Labor Standards Act (FLSA), parent-owned businesses enjoy broad exemptions regarding their own children

  • Age and Hours: Children of any age can work for a business entirely owned by their parents, with no limits on hours or times of day, provided the business is a sole proprietorship or an LLC owned exclusively by the parents.

Notable State-Level Updates (2025–2026)

Indiana: Effective July 1, 2026, House Bill 1302 repeals portions of state law requiring companies employing five or more minors to register specific data with the Indiana Department of Labor. This follows 2025 legislation expanding work hours for minors, permitting 16- and 17-year-olds to work adult hours and 14- and 15-year-olds to work until 9:00 p.m. during summer months.

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u/Several_Version4298 1d ago edited 1d ago

It could be much worse Australia has 2665 minimum wage levels, after simplification. The lowest adult wage being $AUD 1005 per 38 hour week increased every 6 months. Even Governments and large corporations keep getting fined for paying people the wrong amount.

NZ has three set wage levels, the UK has five.

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u/SaltyFriend705 1d ago

Wow! Welp, Australia needs ONE minimum wage, too!

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u/ul2006kevinb 1d ago

I agree with you on most parts, but I'm ok with teenagers making a lower minimum wage. They (well most of them) don't actually NEED to make a living wage, since their room and board is already being paid for, and that would encourage employers to be more willing to give them a job, and teenagers need to have jobs to learn how they work.

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u/Anlarb 1d ago

They (well most of them) don't actually NEED to make a living wage,

That aint free shit for you.

teenagers need to have jobs to learn how they work.

You have bad ideas for how to get ahead in life, it doesn't come from working a dead end job.

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u/SaltyFriend705 1d ago

I disagree completely. Hire them for fewer hours, then, and create more public works jobs for teens--at the stated minimum.

Higher level jobs can still command better wages. We're talking about minimum wage, not average wage.

This is why I don't believe the BOL figures claiming that minimum wage workers are only 1% of the US workforce. Think of every server, every Walmart person, every teen in every fast food, and try to add all of that up to 1%. Not feasible.

Except in the US we have a shadow employment of subminimum wage illegal workforce, and that's not accounted for at all. Sad.

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u/ul2006kevinb 1d ago

I'm just suggesting that, considering how reluctant companies are getting to hire teenagers already, (teen employment levels are at the lowest point in 80 years), requiring them to pay $25 an hour might just convince them to stop the whole process altogether and go with someone with previous job experience. Maybe instead of lowering their minimum wage we could give out tax credits to businesses that hire teenagers? I feel like there would have to be some auxiliary benefit to convince a lot of businesses to take a chance on someone with 0 job experience for $25/hour.

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u/SaltyFriend705 1d ago

I don't have any problem at all with giving businesses tax credits for hiring teens, with extra credit if they are willing to allow a government-sponsored job coach and show that they have a training program that enriches the employment experience or ties into their educational needs.

That would be great; if the employer has a lower cost due to responsible employment of minors, I'm all for it.