FACT CHECK: How Much Would The 1968 Minimum Wage Be Worth Today?
Democratic Rep. Keith Ellison claimed Tuesday that the federal minimum wage from 1968 would be nearly $12 an hour today if adjusted for inflation.
Verdict: True
The minimum wage had its strongest purchasing power in 1968, equivalent to $11.65 an hour in 2018 dollars. Some workers were only eligible for a second, lower minimum wage equal to $8.37 an hour today.
Fact Check:
Ellison appeared on CNN Tuesday to discuss “economic empowerment” ahead of the 50th anniversary of Martin Luther King Jr.’s assassination.
“The fight that Martin Luther King was waging on behalf of poor and working-class people, we can’t deny that we have slipped,” he said on “CNN Tonight.”
In particular, he claimed that the minimum wage would be much higher today if it had merely kept pace with inflation. “The minimum wage if you adjust for inflation from 1968 would be almost $12 an hour,” said Ellison.
To offset the impact of inflation, Congress has raised the minimum wage 22 times since it was first introduced in 1938. The $7.25 an hour minimum wage, last set in 2009, has already lost 13.5 percent of its buying power.
In 1968, the federal government actually had two minimum wages. The default rate stood at $1.60 an hour – the equivalent of $11.65 per hour today, according to a commonly used index for inflation.
But the number of people protected by minimum wage laws in the 1960s was expanding, and newly covered employees in public schools, laundromats, nursing homes and the construction industry were only guaranteed $1.15 an hour in 1968, which translates to $8.37 an hour today.
Those in favor of raising the minimum wage often use 1968 as the base year because that’s when its purchasing power peaked. “While a federal minimum wage in 1968 could have lifted a family of three above the poverty line,” writes CityLab, “now it can’t even do that for a parent with one child, working full-time, 40 hours a week and 52 weeks a year.”
But critics argue that the use of 1968 as the base year is arbitrary.
They point out that if the original minimum wage of $0.25 an hour had been inflation-adjusted all along, it would only come out to $4.45 an hour today – 39 percent less than the current minimum wage. “This is the only logically consistent ‘historic’ value of the minimum wage,” economist Michael Saltsman wrote in a 2013 op-ed for The Wall Street Journal.
Although the federal government doesn’t index the minimum wage to inflation, 18 states do, and 29 states plus the District of Columbia have set wages higher than the federal minimum. “Most Americans are now covered by higher minimums set by state and local laws,” says a Pew Research article from 2017.
Only 2.3 percent of hourly workers were paid at or below the federal minimum wage in 2017.
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