Thursday, September 05, 2013



IWS Documented News Service


Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau



Congressional Research Service (CRS)


Inflation and the Real Minimum Wage: A Fact Sheet

Craig K. Elwell, Specialist in Macroeconomic Policy

June 21, 2013

[full-text, 4 pages]



The Fair Labor Standards Act (FLSA) of 1938 established the hourly minimum wage rate at

25 cents for covered workers.1 Since then, it has been raised 22 separate times, in part to

keep up with rising prices. Most recently, in July 2009, it was increased to $7.25 an hour.

Because there have been some extended periods between these adjustments while inflation

generally has increased, the real value (purchasing power) of the minimum wage has decreased

substantially over time.


The peak value of the minimum wage in real terms was reached in 1968. To equal the purchasing

power of the minimum wage in 1968 ($10.70), the current minimum wage’s real value ($7.90)

would have to be $2.80 (or 26%) higher. Although the nominal value of the minimum wage was

increased by $5.65 (from $1.60 to $7.25) between 1968 and 2009, these legislated adjustments

did not enable the minimum wage to keep pace with the increase in consumer prices, so the real

minimum wage fell.


Table 1. The Statutory Minimum Wage, Hourly Earnings, and Inflation

(real values expressed in May 2013 dollars)


This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.


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