The value of the federal minimum wage has reached its lowest point in 66 years, according to an EPI analysis of recently released Consumer Price Index (CPI) data. Accounting for price increases in June, the current federal minimum wage of $7.25 per hour is now worth less than at any point since February 1956. At that time, the federal minimum wage was 75 cents per hour, or $7.19 in June 2022 dollars.
Last July marked the longest period without a minimum wage increase since Congress established the federal minimum wage in 1938, and continued inaction on the federal minimum wage over the past year has only further eroded the minimum wage’s value. As shown in Figure A, a worker paid the current $7.25 federal minimum wage earns 27.4% less in inflation-adjusted terms than what their counterpart was paid in July 2009 when the minimum wage was last increased, and 40.2% less than a minimum wage worker in February 1968, the historical high point of the minimum wage’s value.
The minimum wage increases of the late 1960s expanded the coverage of the minimum wage to include industries like agriculture, nursing homes, restaurants, and other service industries. The earlier exemption of these industries from the federal minimum wage disproportionately excluded Black workers from this important labor protection. The application of the minimum wage to these industries raised workers’ incomes and directly reduced Black-white earnings inequality. Congress’s failure to raise the minimum on a regular basis in the interim, however, has eroded the value of the federal minimum wage and worsened racial earnings gaps.
After the longest period in history without an increase, the federal minimum wage today is worth 27% less than 13 years ago—and 40% less than in 1968: Real value of the minimum wage (adjusted for inflation)
Note: All values in June 2022 dollars, adjusted using the CPI-U in 2022 chained to the CPI-U-RS (1978–2021) and CPI-U-X1 (1967–1977) and CPI-U (1966 and before).
Source: Fair Labor Standards Act and amendments.
As Congressional inaction on the minimum wage continues, 30 states and nearly 50 cities and counties have enacted higher minimum wages. This includes 12 states and the District of Columbia that have adopted minimum wages of $15 or higher. Most recently, Hawaii lawmakers elected to raise their state’s minimum wage to $18 by 2028, and policymakers in New York are considering a proposal to raise the minimum wage to upwards of $20 an hour in New York City, with minimum wages a few dollars lower throughout the rest of the state.
A national $15 minimum wage would raise the incomes of tens of millions of workers, including servers in restaurants, grocery store employees, and essential health care workers—as many as 2 million direct care workers who provide long-term services and supports would benefit from a $15 minimum wage in 2025. Although the Biden-Harris administration recently raised the minimum wage to $15 per hour for federal contractors, it is past time to raise the minimum wage for all workers.
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