The Current US Minimum Wage of $7.50/hr Hits Lowest Purchasing Power Since 1945

The minimum wage serves as a crucial benchmark for ensuring a basic standard of living and reducing income inequality. However, its failure to keep pace with inflation has widened the gap between the cost of living and the earnings of millions of Americans. Stocklytics.com reveals that at $7.50 per hour, the current minimum wage has the lowest purchasing power since 1945.

Edith Reads, the financial analyst at Stocklytics, remarked on the condition:

The value of the minimum wage in America has diminished due to congressional inaction. Issues lie in the lack of legislative measures to adjust the wage floor in line with inflation and changing economic realities.

Stocklytics Financial Analyst, Edith Reads

Minimum Wage Keeps Going Down

America has seen the longest period without an increase in the federal minimum wage. In 2023, the federal minimum wage was 40% lower than in 1970, which was a mere $1.6. The disparity has led a dozen states, cities, and the District of Columbia to adjust their minimum wages to 15% per hour. However, more than 25 States have passed legislation prohibiting the increase in minimum wage by local governments.

Raise the Wage Act of 2021 proposed an increase of the national minimum wage to $15 by 2025. Implementing this Act would be a great win for over 30 million workers across the United States. 

The potential impact of this Act is profound, particularly for marginalized communities, with approximately 31% of black workers and 26% of Hispanic workers poised to benefit from the wage increase. Such an increase will have immense outcomes, like lifting 3.7 million people out of the poverty line.

How to Move Forward

There is a need to address the minimum wage by all means possible. The government should enact policies that favor the workers while considering their concerns. Simultaneously, the private sector must also ensure they set meaningful minimum wages for staff. One critical step the government should take is increasing the minimum wage to align with the current cost of living. By enacting the proposed 15%, low-wage workers will have the needed relief, fostering economic growth in the process.

Additionally, policymakers could work on laws to peg the minimum wage to inflation as it will ensure it walks hand in hand with the rising cost of living. Such a proactive approach would ensure the purchasing power of workers is not affected by inflation.