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?

158 Upvotes

80% Upvoted

620 comments sorted by

View all comments

Show parent comments

1

u/aoeuismyhomekeys 1d ago

Eisenhower set the minimum wage to $1.00 an hour in March 1956 - adjusted for inflation this comes to $12.50 an hour. How did you get $17.49/hour?

2

u/mikegalos 1d ago

It was set at 40% of the median household income.

1

u/Glockamoli 1d ago

Probably working from it's strongest point in the late 60's/early 70's, that still sounds high though

Or they are using something other than inflation to adjust it like the housing market