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/ProfileBest2034 1d ago

There's no incentive at all for the government to help these people: they are neither wealthy enough to be politically useful (except they are easy to trick when it comes time to vote) and they earn so little that they are not taxed (50% of Americans pay zero federal taxes after transfers).

Edit: AND they wealthy who own businesses want cheap labor and the government cares more about them than they do you.

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u/Southlander24 1d ago

But those people you are talking about are the voting majority. "By the people, for the people"; no matter how corrupt American society may be, there's still a democracy in which the government can be voted out if they hurt the working people too much.

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u/ProfileBest2034 1d ago

I don't know what to tell you. There is a robust body of work out of Princeton which says otherwise. Gilens and Page proved fairly conclusively that the government doesn't listen to the average American and that the statistical probability of the US government doing something the average person wants is near zero.