The Fair Labor Standards Act (FLSA) of 1938 established the hourly minimum wage rate at 25 cents for covered workers. 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

Elwell, Craig K

English

The Fair Labor Standards Act (FLSA) of 1938 established the hourly minimum wage rate at 25 cents for covered workers. 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.CRS_Inflation_and_the_Real_Minimum_Wage_0114.pdf: 324 downloads, before Oct. 1, 2020

Elwell, Craig K.

eCommons@Cornell

Inflation and the Real Minimum Wage: A Fact Sheet

Report that discusses the federal minimum wage which is not indexed to the price level

UNT Digital Library

CRS Report for CongressPrepared for Members and Committees of Congress          Inflation and the Real Minimum Wage: A Fact Sheet Craig K. Elwell Specialist in Macroeconomic Policy June 21, 2013 Congressional Research Service 7-5700 www.crs.gov R42973 Inflation and the Real Minimum Wage: A Fact Sheet  Congressional Research Service 1 he 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 Real Minimum Wage The minimum wage is not indexed to the price level. It has been legislatively increased from time to time to make up for the loss in its real value caused by inflation. In nominal (current dollar) terms, the minimum wage has risen steadily from 25 cents to $7.25 an hour, where it has remained since its effective date of July 2009. As the legislated adjustments to the minimum wage standard have occurred at irregular intervals—sometimes increasing annually, other times not for several years—while prices have generally risen each year, the purchasing power (real or constant dollar value) of the minimum wage has varied considerably since its enactment. For each time the minimum wage was changed, Table 1 presents its nominal and real value. The inflation adjustments to the minimum wage are made using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Real values of the minimum wage are expressed in terms of May 2013 dollars, the latest month for which the index is available at the time of the fact sheet’s preparation. Data on average hourly earnings in nominal and constant (May 2013) dollars are displayed for comparison purposes. The last column of the table shows levels of the CPI-W since the inception of the federal minimum wage. The U.S. Bureau of Labor Statistics calculates the earnings series2 and the CPI-W.3 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. In addition to comparing the rate of increase in the minimum wage with prices, the level of the minimum wage also has been compared with the average hourly earnings of most workers in the private nonfarm economy—which also peaked in 1968 at 54% (see footnote a in the table). In no other year did the minimum wage exceed half of average hourly earnings. The legislated adjustments that occurred after 1968 resulted in the minimum wage ranging from 34% to 47% of average hourly earnings.                                                  1 For the minimum wage’s legislative history and other information on the labor standard, see CRS Report R42713, The Fair Labor Standards Act (FLSA): An Overview, by Gerald Mayer, Benjamin Collins, and David H. Bradley. 2 The earnings series are available at http://stats.bls.gov/ces/home.htm#tables. 3 The CPI is available at http://stats.bls.gov/cpi/data.htm. TInflation and the Real Minimum Wage: A Fact Sheet  Congressional Research Service 2 Table 1. The Statutory Minimum Wage, Hourly Earnings, and Inflation (real values expressed in May 2013 dollars) Effective Date Statutory Minimum Wage (Nominal $) Statutory Minimum Wage  (Real $) Average Hourly Earnings in the Private Sectora (Nominal $) Average Hourly Earnings in the Private Sectora (Real $) Minimum Wage as a Percentage of Average Hourly Earnings CPI-W (1982-1984=100) Oct. 1938 $0.25 $4.07 n.a. n.a.  14.1 Oct. 1939 0.30 4.88 n.a. n.a.  14.1 Oct. 1945 0.40 5.04 n.a. n.a.  18.2 Jan. 1950 0.75 7.26 n.a. n.a.  23.7 Mar. 1956 1.00 8.50 n.a. n.a.  27.0 Sept. 1961 1.15 8.74 n.a. n.a.  30.2 Sept. 1963 1.25 9.28 n.a. n.a.  30.9 Feb. 1967 1.40 9.70 2.81 19.47 50% 33.1 Feb. 1968 1.60 10.70 2.95 19.74 54 34.3 May 1974 2.00 9.40 4.39 20.63 46 48.8 Jan. 1975 2.10 9.20 4.61 20.19 46 52.4 Jan. 1976 2.30 9.42 4.91 20.11 47 56.0 Jan. 1978 2.65 9.68 5.68 20.74 47 62.8 Jan. 1979 2.90 9.68 6.16 20.57 47 68.7 Jan. 1980 3.10 9.08 6.61 19.37 47 78.3 Jan. 1981 3.35 8.78 7.22 18.92 46 87.5 Apr. 1990 3.80 6.85 10.15 18.29 37 127.3 Apr. 1991 4.25 7.31 10.47 18.00 41 133.3 Oct. 1996 4.75 7.00 12.18 17.95 39 155.5 Sept. 1997 5.15 7.46 12.64 18.32 41 158.3 July 2007 5.85 6.59 17.45 19.65 35 203.700 July 2008 6.55 6.95 18.02 19.11 36 216.304 July 2009 7.25 7.90 18.52 20.19 39 210.526 May 2013b   20.08 20.08  229.399 Source: Minimum wage levels in nominal dollars from the U.S. Department of Labor. Nominal earnings and the CPI from the U.S. Bureau of Labor Statistics. Real minimum wage and earnings levels calculated by CRS. Notes: n.a. = not available. a. The not seasonally adjusted earnings data cover production and nonsupervisory employees in the private sector of the nonfarm economy who in recent years have made up about 82% of all private nonfarm employees. Earnings data for all private sector employees in the nonfarm economy were not calculated until 2006.  b. Latest earnings and price data available at the time of the fact sheet’s preparation.  Inflation and the Real Minimum Wage: A Fact Sheet  Congressional Research Service 3 Author Contact Information  Craig K. Elwell Specialist in Macroeconomic Policy celwell@crs.loc.gov, 7-7757    Acknowledgments Adapted from an earlier fact sheet prepared by Brian Cashell and Linda Levine.  

DigitalCommons@ILR

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Federal Publications Key Workplace Documents 
6-21-2013 
Inflation and the Real Minimum Wage: A Fact Sheet 
Craig K. Elwell 
Congressional Research Service 
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Inflation and the Real Minimum Wage: A Fact Sheet 
Abstract 
The Fair Labor Standards Act (FLSA) of 1938 established the hourly minimum wage rate at 25 cents for 
covered workers. 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. 
Keywords 
Fair Labor Standards Act, minimum wage, purchasing power, inflation 
Comments 
Suggested Citation 
Elwell, C. K. & Levine, L. (2013). Inflation and the real minimum wage: A fact sheet. Washington, DC: 
Congressional Research Service. 
A more recent version of this report can be found here: http://digitalcommons.ilr.cornell.edu/
key_workplace/1222 
An earlier version of this report can be found here: http://digitalcommons.ilr.cornell.edu/key_workplace/
1035/ 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/key_workplace/1152 
CRS Report for Congress
Prepared for Members and Committees of Congress        
 
 
Inflation and the Real Minimum Wage: 
A Fact Sheet 
Craig K. Elwell 
Specialist in Macroeconomic Policy 
June 21, 2013 
Congressional Research Service 
7-5700 
www.crs.gov 
R42973 
Inflation and the Real Minimum Wage: A Fact Sheet 
 
Congressional Research Service 1 
he 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 Real Minimum Wage 
The minimum wage is not indexed to the price level. It has been legislatively increased from time 
to time to make up for the loss in its real value caused by inflation. In nominal (current dollar) 
terms, the minimum wage has risen steadily from 25 cents to $7.25 an hour, where it has 
remained since its effective date of July 2009. As the legislated adjustments to the minimum wage 
standard have occurred at irregular intervals—sometimes increasing annually, other times not for 
several years—while prices have generally risen each year, the purchasing power (real or constant 
dollar value) of the minimum wage has varied considerably since its enactment. 
For each time the minimum wage was changed, Table 1 presents its nominal and real value. The 
inflation adjustments to the minimum wage are made using the Consumer Price Index for Urban 
Wage Earners and Clerical Workers (CPI-W). Real values of the minimum wage are expressed in 
terms of May 2013 dollars, the latest month for which the index is available at the time of the fact 
sheet’s preparation. Data on average hourly earnings in nominal and constant (May 2013) dollars 
are displayed for comparison purposes. The last column of the table shows levels of the CPI-W 
since the inception of the federal minimum wage. The U.S. Bureau of Labor Statistics calculates 
the earnings series2 and the CPI-W.3 
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. 
In addition to comparing the rate of increase in the minimum wage with prices, the level of the 
minimum wage also has been compared with the average hourly earnings of most workers in the 
private nonfarm economy—which also peaked in 1968 at 54% (see footnote a in the table). In no 
other year did the minimum wage exceed half of average hourly earnings. The legislated 
adjustments that occurred after 1968 resulted in the minimum wage ranging from 34% to 47% of 
average hourly earnings. 
                                                 
1 For the minimum wage’s legislative history and other information on the labor standard, see CRS Report R42713, The 
Fair Labor Standards Act (FLSA): An Overview, by Gerald Mayer, Benjamin Collins, and David H. Bradley. 
2 The earnings series are available at http://stats.bls.gov/ces/home.htm#tables. 
3 The CPI is available at http://stats.bls.gov/cpi/data.htm. 
T
Inflation and the Real Minimum Wage: A Fact Sheet 
 
Congressional Research Service 2 
Table 1. The Statutory Minimum Wage, Hourly Earnings, and Inflation 
(real values expressed in May 2013 dollars) 
Effective 
Date 
Statutory 
Minimum 
Wage 
(Nominal $) 
Statutory 
Minimum 
Wage 
 (Real $) 
Average 
Hourly 
Earnings in 
the Private 
Sectora 
(Nominal $) 
Average 
Hourly 
Earnings in 
the Private 
Sectora 
(Real $) 
Minimum 
Wage as a 
Percentage 
of Average 
Hourly 
Earnings 
CPI-W 
(1982-
1984=100) 
Oct. 1938 $0.25 $4.07 n.a. n.a.  14.1 
Oct. 1939 0.30 4.88 n.a. n.a.  14.1 
Oct. 1945 0.40 5.04 n.a. n.a.  18.2 
Jan. 1950 0.75 7.26 n.a. n.a.  23.7 
Mar. 1956 1.00 8.50 n.a. n.a.  27.0 
Sept. 1961 1.15 8.74 n.a. n.a.  30.2 
Sept. 1963 1.25 9.28 n.a. n.a.  30.9 
Feb. 1967 1.40 9.70 2.81 19.47 50% 33.1 
Feb. 1968 1.60 10.70 2.95 19.74 54 34.3 
May 1974 2.00 9.40 4.39 20.63 46 48.8 
Jan. 1975 2.10 9.20 4.61 20.19 46 52.4 
Jan. 1976 2.30 9.42 4.91 20.11 47 56.0 
Jan. 1978 2.65 9.68 5.68 20.74 47 62.8 
Jan. 1979 2.90 9.68 6.16 20.57 47 68.7 
Jan. 1980 3.10 9.08 6.61 19.37 47 78.3 
Jan. 1981 3.35 8.78 7.22 18.92 46 87.5 
Apr. 1990 3.80 6.85 10.15 18.29 37 127.3 
Apr. 1991 4.25 7.31 10.47 18.00 41 133.3 
Oct. 1996 4.75 7.00 12.18 17.95 39 155.5 
Sept. 1997 5.15 7.46 12.64 18.32 41 158.3 
July 2007 5.85 6.59 17.45 19.65 35 203.700 
July 2008 6.55 6.95 18.02 19.11 36 216.304 
July 2009 7.25 7.90 18.52 20.19 39 210.526 
May 2013b   20.08 20.08  229.399 
Source: Minimum wage levels in nominal dollars from the U.S. Department of Labor. Nominal earnings and the 
CPI from the U.S. Bureau of Labor Statistics. Real minimum wage and earnings levels calculated by CRS. 
Notes: n.a.=not available. 
a. The not seasonally adjusted earnings data cover production and nonsupervisory employees in the private 
sector of the nonfarm economy who in recent years have made up about 82% of all private nonfarm 
employees. Earnings data for all private sector employees in the nonfarm economy were not calculated until 
2006.  
b. Latest earnings and price data available at the time of the fact sheet’s preparation. 
 
Inflation and the Real Minimum Wage: A Fact Sheet 
 
Congressional Research Service 3 
Author Contact Information 
 
Craig K. Elwell 
Specialist in Macroeconomic Policy 
celwell@crs.loc.gov, 7-7757 
  
 
Acknowledgments 
Adapted from an earlier fact sheet prepared by Brian Cashell and Linda Levine. 
 


The Fair Labor Standards Act (FLSA) of 1938 established the hourly minimum wage rate at 25 cents for covered workers. 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.CRS_Inflation_and_the_Real_Minimum_Wage_0613.pdf: 825 downloads, before Oct. 1, 2020

Cornell University ILR School 
DigitalCommons@ILR 
Federal Publications Key Workplace Documents 
1-8-2014 
Inflation and the Real Minimum Wage: A Fact Sheet 
Craig K. Elwell 
Congressional Research Service 
Follow this and additional works at: https://digitalcommons.ilr.cornell.edu/key_workplace 
Thank you for downloading an article from DigitalCommons@ILR. 
Support this valuable resource today! 
This Article is brought to you for free and open access by the Key Workplace Documents at DigitalCommons@ILR. 
It has been accepted for inclusion in Federal Publications by an authorized administrator of DigitalCommons@ILR. 
For more information, please contact catherwood-dig@cornell.edu. 
If you have a disability and are having trouble accessing information on this website or need materials in an 
alternate format, contact web-accessibility@cornell.edu for assistance. 
Inflation and the Real Minimum Wage: A Fact Sheet 
Abstract 
The Fair Labor Standards Act (FLSA) of 1938 established the hourly minimum wage rate at 25 cents for 
covered workers. 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. 
Keywords 
Fair Labor Standards Act, minimum wage, purchasing power, inflation 
Comments 
Suggested Citation 
Elwell, C. K. (2014). Inflation and the real minimum wage: A fact sheet. Washington, DC: Congressional 
Research Service. 
A previous version of this report can be found here: http://digitalcommons.ilr.cornell.edu/key_workplace/
1152/ 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/key_workplace/1222 
  
Inflation and the Real Minimum Wage: 
A Fact Sheet 
Craig K. Elwell 
Specialist in Macroeconomic Policy 
January 8, 2014 
Congressional Research Service 
7-5700 
www.crs.gov 
R42973 
Inflation and the Real Minimum Wage: A Fact Sheet 
 
Congressional Research Service 1 
he 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 Real Minimum Wage 
The minimum wage is not indexed to the price level. It has been legislatively increased from time 
to time to make up for the loss in its real value caused by inflation. In nominal (current dollar) 
terms, the minimum wage has risen steadily from 25 cents to $7.25 an hour, where it has 
remained since its effective date of July 2009. As the legislated adjustments to the minimum wage 
standard have occurred at irregular intervals—sometimes increasing annually, other times not for 
several years—while prices have generally risen each year, the purchasing power (real or constant 
dollar value) of the minimum wage has varied considerably since its enactment. 
For each time the minimum wage was changed, Table 1 presents its nominal and real value. The 
inflation adjustments to the minimum wage are made using the Consumer Price Index for Urban 
Wage Earners and Clerical Workers (CPI-W). Real values of the minimum wage are expressed in 
terms of July 2013 dollars, the latest month for which the index is available at the time of the fact 
sheet’s preparation. Data on average hourly earnings in nominal and constant (July 2013) dollars 
are displayed for comparison purposes. The last column of the table shows levels of the CPI-W 
since the inception of the federal minimum wage. The U.S. Bureau of Labor Statistics calculates 
the earnings series2 and the CPI-W.3 
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 ($10.69), the current minimum wage’s real value ($7.25) 
would have to increase by $3.44 (or 47%). 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. 
In addition to comparing the rate of increase in the minimum wage with prices, the level of the 
minimum wage also has been compared with the average hourly earnings of most workers in the 
private nonfarm economy—which also peaked in 1968 at 54% (see footnote a in the table). In no 
other year did the minimum wage exceed half of average hourly earnings. The legislated 
adjustments that occurred after 1968 resulted in the minimum wage ranging from 34% to 47% of 
average hourly earnings. 
                                                 
1 For the minimum wage’s legislative history and other information on the labor standard, see CRS Report R42713, The 
Fair Labor Standards Act (FLSA): An Overview, by Gerald Mayer, Benjamin Collins, and David H. Bradley. 
2 The earnings series are available at http://stats.bls.gov/ces/home.htm#tables. 
3 The CPI is available at http://stats.bls.gov/cpi/data.htm. 
T
Inflation and the Real Minimum Wage: A Fact Sheet 
 
Congressional Research Service 2 
Table 1. The Statutory Minimum Wage, Hourly Earnings, and Inflation 
(real values expressed in July 2013 dollars) 
Effective 
Date 
Statutory 
Minimum 
Wage 
(Nominal $) 
Statutory 
Minimum 
Wage 
 (Real $) 
Average 
Hourly 
Earnings in 
the Private 
Sectora 
(Nominal $) 
Average 
Hourly 
Earnings in 
the Private 
Sectora 
(Real $) 
Minimum 
Wage as a 
Percentage 
of Average 
Hourly 
Earnings 
CPI-W 
(1982-
1984=100) 
Oct. 1938 $0.25 $4.06 n.a. n.a.  14.1 
Oct. 1939 0.30 4.88 n.a. n.a.  14.1 
Oct. 1945 0.40 5.04 n.a. n.a.  18.2 
Jan. 1950 0.75 7.25 n.a. n.a.  23.7 
Mar. 1956 1.00 8.49 n.a. n.a.  27.0 
Sept. 1961 1.15 8.73 n.a. n.a.  30.2 
Sept. 1963 1.25 9.27 n.a. n.a.  30.9 
Feb. 1967 1.40 9.69 2.81 19.53 50% 33.1 
Feb. 1968 1.60 10.69 2.95 19.85 54 34.3 
May 1974 2.00 9.39 4.39 20.68 46 48.8 
Jan. 1975 2.10 9.18 4.61 20.23 46 52.4 
Jan. 1976 2.30 9.41 4.91 20.18 47 56.0 
Jan. 1978 2.65 9.67 5.68 20.78 47 62.8 
Jan. 1979 2.90 9.67 6.16 20.64 47 68.7 
Jan. 1980 3.10 9.07 6.61 19.43 47 78.3 
Jan. 1981 3.35 8.77 7.22 18.99 46 87.5 
Apr. 1990 3.80 6.84 10.15 18.37 37 127.3 
Apr. 1991 4.25 7.31 10.47 18.11 41 133.3 
Oct. 1996 4.75 7.00 12.18 18.00 39 155.5 
Sept. 1997 5.15 7.45 12.64 18.32 41 158.3 
July 2007 5.85 6.58 17.45 19.71 34 203.700 
July 2008 6.55 6.94 18.02 19.10 36 216.304 
July 2009 7.25 7.89 18.52 20.19 39 210.526 
Nov. 2013b 7.25 7.25 20.31 20.31 36 229.133 
Source: Minimum wage levels in nominal dollars from the U.S. Department of Labor. Nominal earnings and the 
CPI from the U.S. Bureau of Labor Statistics. Real minimum wage and earnings levels calculated by CRS. 
Notes: n.a. = not available. 
a. The not seasonally adjusted earnings data cover production and nonsupervisory employees in the private 
sector of the nonfarm economy who in recent years have made up about 82% of all private nonfarm 
employees. Earnings data for all private sector employees in the nonfarm economy were not calculated until 
2006.  
b. Latest earnings and price data available at the time of the fact sheet’s preparation. 
 
Inflation and the Real Minimum Wage: A Fact Sheet 
 
Congressional Research Service 3 
Author Contact Information 
 
Craig K. Elwell 
Specialist in Macroeconomic Policy 
celwell@crs.loc.gov, 7-7757 
  
 
Acknowledgments 
Adapted from an earlier fact sheet prepared by Brian Cashell and Linda Levine. 
 


This report provides data on the minimum wage that was changed, and it presents its nominal and real value

CRS Report for CongressPrepared for Members and Committees of Congress          Inflation and the Real Minimum Wage: A Fact Sheet Craig K. Elwell Specialist in Macroeconomic Policy September 12, 2013 Congressional Research Service 7-5700 www.crs.gov R42973 Inflation and the Real Minimum Wage: A Fact Sheet  Congressional Research Service 1 he 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 Real Minimum Wage The minimum wage is not indexed to the price level. It has been legislatively increased from time to time to make up for the loss in its real value caused by inflation. In nominal (current dollar) terms, the minimum wage has risen steadily from 25 cents to $7.25 an hour, where it has remained since its effective date of July 2009. As the legislated adjustments to the minimum wage standard have occurred at irregular intervals—sometimes increasing annually, other times not for several years—while prices have generally risen each year, the purchasing power (real or constant dollar value) of the minimum wage has varied considerably since its enactment. For each time the minimum wage was changed, Table 1 presents its nominal and real value. The inflation adjustments to the minimum wage are made using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Real values of the minimum wage are expressed in terms of July 2013 dollars, the latest month for which the index is available at the time of the fact sheet’s preparation. Data on average hourly earnings in nominal and constant (July 2013) dollars are displayed for comparison purposes. The last column of the table shows levels of the CPI-W since the inception of the federal minimum wage. The U.S. Bureau of Labor Statistics calculates the earnings series2 and the CPI-W.3 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 ($10.77), the current minimum wage’s real value ($7.90) would have to increase by $2.87 (or 36%). 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. In addition to comparing the rate of increase in the minimum wage with prices, the level of the minimum wage also has been compared with the average hourly earnings of most workers in the private nonfarm economy—which also peaked in 1968 at 54% (see footnote a in the table). In no other year did the minimum wage exceed half of average hourly earnings. The legislated adjustments that occurred after 1968 resulted in the minimum wage ranging from 34% to 47% of average hourly earnings.                                                  1 For the minimum wage’s legislative history and other information on the labor standard, see CRS Report R42713, The Fair Labor Standards Act (FLSA): An Overview, by Gerald Mayer, Benjamin Collins, and David H. Bradley. 2 The earnings series are available at http://stats.bls.gov/ces/home.htm#tables. 3 The CPI is available at http://stats.bls.gov/cpi/data.htm. TInflation and the Real Minimum Wage: A Fact Sheet  Congressional Research Service 2 Table 1. The Statutory Minimum Wage, Hourly Earnings, and Inflation (real values expressed in July 2013 dollars) Effective Date Statutory Minimum Wage (Nominal $) Statutory Minimum Wage  (Real $) Average Hourly Earnings in the Private Sectora (Nominal $) Average Hourly Earnings in the Private Sectora (Real $) Minimum Wage as a Percentage of Average Hourly Earnings CPI-W (1982-1984=100) Oct. 1938 $0.25 $4.08 n.a. n.a.  14.1 Oct. 1939 0.30 4.90 n.a. n.a.  14.1 Oct. 1945 0.40 5.04 n.a. n.a.  18.2 Jan. 1950 0.75 7.28 n.a. n.a.  23.7 Mar. 1956 1.00 8.52 n.a. n.a.  27.0 Sept. 1961 1.15 8.76 n.a. n.a.  30.2 Sept. 1963 1.25 9.31 n.a. n.a.  30.9 Feb. 1967 1.40 9.73 2.81 19.53 50% 33.1 Feb. 1968 1.60 10.77 2.95 19.85 54 34.3 May 1974 2.00 9.42 4.39 20.68 46 48.8 Jan. 1975 2.10 9.22 4.61 20.23 46 52.4 Jan. 1976 2.30 9.45 4.91 20.18 47 56.0 Jan. 1978 2.65 9.70 5.68 20.78 47 62.8 Jan. 1979 2.90 9.72 6.16 20.64 47 68.7 Jan. 1980 3.10 9.10 6.61 19.43 47 78.3 Jan. 1981 3.35 8.81 7.22 18.99 46 87.5 Apr. 1990 3.80 6.88 10.15 18.37 37 127.3 Apr. 1991 4.25 7.35 10.47 18.11 41 133.3 Oct. 1996 4.75 7.03 12.18 18.00 39 155.5 Sept. 1997 5.15 7.47 12.64 18.32 41 158.3 July 2007 5.85 6.61 17.45 19.71 34 203.700 July 2008 6.55 6.94 18.02 19.10 36 216.304 July 2009 7.25 7.90 18.52 20.19 39 210.526 July 2013b 7.25 7.25 20.16 20.16 36 229.399 Source: Minimum wage levels in nominal dollars from the U.S. Department of Labor. Nominal earnings and the CPI from the U.S. Bureau of Labor Statistics. Real minimum wage and earnings levels calculated by CRS. Notes: n.a. = not available. a. The not seasonally adjusted earnings data cover production and nonsupervisory employees in the private sector of the nonfarm economy who in recent years have made up about 82% of all private nonfarm employees. Earnings data for all private sector employees in the nonfarm economy were not calculated until 2006.  b. Latest earnings and price data available at the time of the fact sheet’s preparation.  Inflation and the Real Minimum Wage: A Fact Sheet  Congressional Research Service 3 Author Contact Information  Craig K. Elwell Specialist in Macroeconomic Policy celwell@crs.loc.gov, 7-7757    Acknowledgments Adapted from an earlier fact sheet prepared by Brian Cashell and Linda Levine.  

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Inflation and the Real Minimum Wage: A Fact Sheet

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