m wage in 2009 was still 7.8 percent less than its value in 1967 (in 2011 dollars).
- In 2011, the minimum wage was worth only about 37 percent of what an average worker earned per hour, not far above its lowest point, reached in 2006, in 47 years.
- A higher minimum wage would disproportionately affect women: They constitute a majority (54.5 percent) of those who would benefit, greater than their 48.3 percent share of the workforce. Historically, the minimum wage has been more important in setting a floor for women than for men.
- The vast majority (87.9 percent) of those who would be affected by the higher minimum wage are age 20 or older.
- A higher minimum wage would help address growing inequality, particularly as it affects lower-wage women. Between 1979 and 2009 the erosion of the minimum wage explained about two-thirds (65.5 percent) of the large 25.2 (log percentage point) expansion of the wage gap between median-wage workers and workers at the 10th percentile in wages—known as the 50/10 wage gap—among women but just over a tenth (11.3 percent) of the smaller 5.3 expansion of the 50/10 wage gap among men. For workers overall more than half (57.0 percent) of the increase in the 50/10 wage gap from 1979 to 2009 was accounted for by the erosion of the minimum wage.
The following discussion replicates the text, tables, and figures from the minimum wage discussion in Chapter 4 of EPI’s The State of Working America, 12th Edition. The tables can also be found online at stateofworkingamerica.org.
The decline in the real value of the minimum wage
Table 4.39 and Figure 4AD track changes in the value of the minimum wage. Legislated increases in the federal minimum wage in both 2007 and 2008 boosted it from $5.15 in 2006 to $7.25 in 2009, its highest level in real terms since 1981. But even after this nearly 41 percent increase, the minimum wage in 2009 was still 7.8 percent less than its value in 1967 (in 2011 dollars). After two years of inflation the minimum wage in 2011 was 12.1 percent below the 1967 level. The minimum wage declined steeply and steadily between 1979 and 1989, when inflation whittled it down from $8.38 to $5.87 (in 2011 dollars), a fall of 29.9 percent. The legislated increases in the minimum wage in 1990 and 1991 and again in 1996 and 1997 raised the value of the minimum wage from 1989 to 2000 by 14.6 percent (in 2011 dollars). The value grew another 7.8 percent from 2000 to 2011.
A more appropriate way to assess the level of the current minimum wage in historical terms is to examine the minimum wage’s share of the average worker’s wage (as measured by the average hourly earnings of production/nonsupervisory workers), as shown in Figure 4AE. In 2011, the minimum wage was worth only about 37 percent of what an average worker earned per hour, not far above its lowest point, reached in 2006, in 47 years. In contrast, the minimum wage’s share of the average wage was about 50 percent in the late 1960s, about 45 percent in the mid-1970s, and about 40 percent in the early 1990s. This analysis shows that the earnings of low-wage workers have fallen significantly behind those of other workers, and that the decline in the real value of the minimum wage is a causal factor in rising wage inequality.
It has been argued that the minimum wage primarily affects teenagers and others with no family responsibilities. To address this claim, Table 4.40 examines the demographic composition of the workforce that would benefit from an increase in the minimum wage in 2014 to $9.80, about 47 percent of the average wage. This analysis takes into account the many workers benefiting from a state minimum wage higher than the current federal level (discussed further below). Assessing who would benefit sheds light on who has been affected by the long-term drop in the real value of the minimum wage.
An analysis of only those earning between the current and the proposed new minimum wage would be too narrow, since a higher minimum wage would affect workers who earn more than but close to the proposed new minimum; they would receive incr