Great news, minimum wage workers: if you spend the next year working without getting sick or, um, going on vacation, you’ll make $13,624! Uncle Sam’s $0.70 minimum wage hike is the second of three to take effect before next summer, but the meager raise is hardly a godsend for the working poor.
Last week, the Labor Department reported the fastest inflation since 1991 — 5 percent for June compared with a year earlier. Energy costs soared nearly 25 percent. The price of food rose more than 5 percent.
So the minimum wage hike is “a drop in the bucket compared to the increases in costs, declining labor market, and declining household wealth that consumers have experienced in the past year,” Lehman Brothers economist Zach Pandl said.
The new minimum is less than the inflation-adjusted 1997 level of $7.02, and far below the inflation-adjusted level of $10.06 from 40 years ago, according to a Labor Department inflation calculator.
25 states require employers to pay more than the national minimum wage, but 1.7 million Americans still rely on the federal government to set a wage floor. Only 20% of them are teenagers.
The nation’s top financial minds can’t tell us how the minimum wage effects the economy, but we’re sure our beloved cadre of ever-cheerful commenters not only knows for certain, but is willing to share.
Federal minimum wage rises to $6.55 today [AP]
(AP Photo/ Ellen Wznick)