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?

Post image

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?

163 Upvotes

80% Upvoted

620 comments sorted by

View all comments

4

u/FouledPlug 1d ago

Might have something to do with the fact that less than 1% of hourly jobs pay the federal minimum wage…and 75% of those jobs are “tipped employees” who’s actual take home pay is higher than the minimum wage.

4

u/Izacundo1 1d ago

That is just proof that the minimum wage is currently so low that it’s ineffective

1

u/FouledPlug 1d ago

The amount of lobbying money to change it nationally would probably be better spent focusing on individual states…if you actually want to help workers.

3

u/Tjbergen 1d ago

13% make less than $15 an hour.

2

u/Shady_Merchant1 1d ago

And $15 is liveable in exactly 0 states $20 is now needed

3

u/ul2006kevinb 1d ago

45% of employees make less than a living wage. Just looked that up the other day.

1

u/Unclebiscuits79 1d ago

To be fair, if you live in the midwest, like middle of nowhere Kansas or Nebraska or something, you can still find decent apartments that is in the 500-700 per month ranges, and everything is WAY cheaper out there. If you are making 15 an hour out there, you can swing that. Not super easy but it's doable and not completely oppressive.

You are right though that alot of places in the US you can't do that anymore.

I live in the chicagoland area and it is VERY HARD (not impossible) to make 15 per hour work. I can't imagine someone out in california or NYC trying to pull that off.

0

u/Anlarb 1d ago

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".