Real and Nominal Minimum Wage

Back to blogging after a trip to Washington DC that was great but travel back was delayed by weather. Then I had a conference paper draft to complete. So now I can blog some more.

There is a regular caller to the radio station that talks a great deal about the inequities in compensation over the years. Essentially the point he makes is that many more are falling behind in compensation than we realize and that executives and the like are the only ones gaining. That is a rough summary, but it is pretty close.

The caller frequently mentions the minimum wage as an example of the erosion of purchasing power. Let us see how this happened over the years.

The minimum wage has been converted into 2015 dollars in this case. So there is a clear decline the the value of the minimum wage from effectively more than $10 to its current value of $7.25. I do not think this is a surprise really but there are some counters to this.

What are minimum wage jobs supposed to be? Is it the case that you are supposed to support yourself on the minimum wage? I think the perception I have from most callers is that the answer is no. However I do think a fair counter to that is to ask what purpose the minimum wage serves if that is the case.

So what do we make of this? It is certainly another area where you look at the outcomes and question the efficacy of the policy design at this time. Not that it did not work at some point, but you can always open up and ask the question at a later date. That is not done nearly frequently enough to be honest. Given the frequent reference to this I thought it would be a useful data series to generate.

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