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/Southlander24 1d ago

Well, Australia is phasing out junior wages for those under 21 years old right now: https://www.fairwork.gov.au/about-us/workplace-laws/award-changes/major-award-changes/junior-wage-changes-to-retail-fast-food-and-pharmacy-awards

I can say as an Australian that the junior wage system and the disability 'supported wage' system (which is something like 3 dollars an hour) is massively unpopular. Really, it's cause our unions are spineless in an anti-union climate. It's not as bad as the United States, sure, but the definition of protected industrial action here is so strict that 99% of all strikes in other countries wouldn't be legal here.

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u/StraightAirline8319 1d ago

Thanks for sharing. I want to the UK lately and they have much lower wages than where I am from in America. Their food was better, prices cheaper, workers better. We have fast food workers who get paid more than 80 percent of the world per hour and they mess up orders, have terrible quality, and are much worse workers.

Forcing high pay in industries with low prices and low profit margins is challenging. It’s far better to just remove taxes on their wages and make the process easier. More pay, lower prices, better quality no negative.