The federal minimum wage was created in 1933 but declared unconstitutional by a conservative Supreme Court. It eventually came into being in 1938 under the Fair Labor Standards Act, the same bill that prohibited child labor and limited the workweek to 44 hours. The point was to make sure that people who work for a living have enough to live on. Today, that’s far from the case.
According to MIT’s living wage calculator, the living wage for a single adult in Crawford County is $12.20/hour. For a family of four in Crawford County, two working adults must earn at least $28 an hour to support their family. The current minimum wage in Pennsylvania and the U.S. is $7.25 an hour. Nobody can live on that.
Economists have pointed out that until 1968, the minimum wage kept pace with inflation and labor productivity. Ever since, it has fallen behind. The productivity of American labor is up by 80 percent since the end of the 1970s, while average wages are up only 8 percent. In other words, workers have been producing more but getting paid less.
Where has the money gone? To executives and shareholders. Since 1978, CEO compensation has grown 940 percent. Now the typical CEO makes 300 times more than the typical worker (in the 1960s, that ratio was 20-to-1).
This is reflected in the minimum wage. If the minimum wage had kept pace with the productivity of American labor since 1968, it would be $24 an hour, according to economist Dean Baker. As Baker writes, “It is worth considering what the world would look like if this were the case. A minimum wage of $24 an hour would mean that a full-time full year minimum wage worker would be earning $48,000 a year. A two minimum wage earning couple would have a family income of $96,000 a year, enough to put them in the top quintile of the current income distribution.”
Right now, minimum wage workers, like most workers, are at the bottom of the income distribution. The reason workers are at the bottom is because all the money has been going to the top.