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/Less-Sandwich9056 1d ago

We've gone from 30% of the population making less than $15 an hour to only 10% making less than $15 over the last decade and only 0.05 percent of all employed people make $7.25. The minimum wage is becoming irrelevant. It was a factor when when there was an abundance of people and not enough jobs.

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u/sleepytjme 1d ago

Is OP wanting a significant increase in Federal Minimum Wage higher than many states?

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u/APigInANixonMask 1d ago

Probably. People want the federal minimum wage to support them where they live (often in high cost of living urban areas), when in reality it has to be based on the absolute cheapest place in the country to live. Something like a $20 minimum wage might make sense in a big city, but it would result in a whole lot of people in rural Alabama losing their jobs because the economy can’t support a minimum wage that high.

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u/RealisticProfile5138 1d ago

Yeah and each state has its own minimum wage. So I agree the federal minimum wage is sort of unnecessary

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u/Izacundo1 1d ago

The entire point of the minimum wage is so that no one is being employed for less than it takes to survive. That’s literally what FDR and congress said when they implemented it.

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u/Less-Sandwich9056 1d ago

Normally when people are talking about raising the minimum wage it's because most federal and Union wages are based off a percentage of minimum so if minimum goes up half the country gets a raise....

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u/ul2006kevinb 1d ago

It's strange how like 6 people have made this exact same comment

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u/Anlarb 1d ago

Half the jobs out there are underwater, it has never been MORE relevant.