The $7.25 federal minimum wage has not been changed since 2009 and remains below historic levels when adjusted for inflation — despite gains in worker productivity. It works out to just $15,080 a year before taxes on a 40-hour-a-week schedule1.
The minimum started in 1938 at $0.25 per hour2. The minimum wage has not kept pace with overall wages as shown in the chart below3.
Why can’t things that do not need to be voted on over and over, and that are very dependent on the political winds at the time, be put on auto-pilot an allowed to adjust themselves? The minimum wage is one such policy item screaming to be allowed to gradually increase along with everyone else’s income increases.
Set the minimum wage to be 25% of the 90% percentile hourly income in the country, adjusted every 2 years. Then we do not have to let it lag and then Businesses complain about the huge increase after a 10 year pause. Or debate is the minimum wage reducing jobs (BTW individuals also do not need as many jobs if they are making more per hour) or is it because of productivity increases.
To take the sting out of raising the minimum wage. Companies employing minimum wage workers would get a tax break on their employee Social Security taxes if my other recommendation is implemented4.