By Alain Sherter
CBS Money Watch, July 24, 2014
... Although the minimum wage has risen to $7.25 over the ensuing years (tipped workers typically earn much less), the purchasing power of employees earning that baseline level pay has steadily shrunk because it isn't rising along with inflation. In fact, minimum-wage workers earn less today in real dollars than they did more than 50 years ago. In financial terms, they have effectively defied the laws of physics and traveled backward in time.
Today marks the five-year anniversary since the federal minimum was last raised, from $6.55 an hour. Since 2009, earners making that amount have lost nearly 6 percent of their buying power, according to the Pew Research Center. Here's what that means in terms the average consumer can appreciate:
In July 2009, a pound of ground beef cost about $2.15; today that will run you $3.88, up 80 percent.
Five years ago a gallon of whole milk cost about $3, versus $3.62 today.
A gallon of regular gas in the summer of 2009 ago ran $2.61, compared with $3.54 today.
Rent? Over that time that's risen from a U.S. median of $461 a month to more than $760.
Despite the current political impasse in Washington ahead of the November midterm elections, even conservatives who might have been expected to join the GOP chorus on the minimum wage have started to sing a different tune. ...
Maybe such voters were convinced by the recent U.S. Labor Department research that showed that the 13 states around the U.S. that raised their minimum wage since 2013 are showing stronger economic growth than states where pay remains frozen. Or it could be the support that many small business owners -- the very companies that are supposed to take the biggest hit by raising workers' pay -- are showing for a wage hike.
Perhaps it's just common sense. After all, the minimum wage is supposed to provide a floor for pay, a fair and economically sensible threshold both for workers and employers. But neither side benefits if the floor keeps dropping.
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