Upon inception it was set at $0.25. It is now $7.25.

  • Jimmyeatsausage@lemmy.world
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    1 year ago

    This kind of context?

    $1 in 1938 is equivalent in purchasing power to about $21.77 today, an increase of $20.77 over 85 years. The dollar had an average inflation rate of 3.69% per year between 1938 and today, producing a cumulative price increase of 2,077.49%.

    Minimum wage workers today have less purchasing power than they did in the Great Depression

    • Awesome357@lemmy.world
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      1 year ago

      If $1 then is now equivalent to $21.77, then that $0.25 minimum wage then would today only be $5.44 (25% of $21.77). $7.25 represents 133% more purchasing power.

    • Rehwyn@lemmy.world
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      1 year ago

      Why are you comparing $1 to $0.25? This is an incorrect way to compare relative purchasing power.

      As already pointed out, if $1 in 1938 is equivalent to $21.77 today, then $0.25 in 1938 is equivalent to $5.44 today ($21.76 / 4). Since minimum wage is $7.25, they are earning more per hour now after adjusting for inflation.

      Another way to think about it is if someone wanted to buy something for $1 in 1938, they’d need 4 hours of minimum wage work ($1 / $0.25 = 4 hrs). That same $1 expense would be $21.77 today, or $21.77/7.25 = 3.0 hours of minimum wage work.

      This isn’t necessarily justification that the minimum wage isn’t in need of an increase today, by the way. I personally think it needs an increase (among other work reforms) and is a decent argument that minimum wage in the US has been too low since it’s inception. But it has increased since 1938 after adjusting for inflation.

    • Jimmyeatsausage@lemmy.world
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      1 year ago

      I think some of you are conflating inflation and price increases. Inflation is the decrease in the value of money. Price increases are increases in the cost of commodities. I know that sounds a little pedantic, but while inflation can cause price increases, so can other things (things like taxes or monopolies). If the cost of living were locked to inflation, then yes, you’d see a 33% increase in the value of minimum wage. As an example, a 2 bedroom house was around $3900 in 1938. If you made minimum wage, then a house costs about 4 years’ worth of labor. It’s harder to get stats like that today because it varies so much by region… but I live in a pretty low cost-of-living state, and the median cost of a 2 bedroom house here is around $240k. Minimum wage today will earn you about $15k annually, meaning a house now costs 16 years’ worth of labor.

    • Michal@programming.dev
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      1 year ago

      I meant to say 7$ doesn’t mean much. It’s like saying company share price went up by 7$, that’s why stock market changes are expressed in % not in $.