Minimum Wage Stuck in the 1950s

by Holly Sklar / July 25th, 2009

Are you better off than you were 40 years ago? Not if you’re a minimum wage worker.

It would take $9.92 today to match the buying power of the minimum wage at its peak in 1968, the year Martin Luther King died fighting for living wages for sanitation workers.

In today’s dollars, the 1968 hourly minimum wage adds up to $20,634 a year working full time. The new federal minimum wage of $7.25 comes to just $15,080. That’s $ 5,554 in lost wages.

“It is criminal to have people working on a full-time basis … getting part-time income,” King told workers in Memphis, Tenn., days before his murder. King said, “We are tired of working our hands off and laboring every day and not even making a wage adequate with daily basic necessities of life.”

Imagine what King would say today.

The minimum wage is stuck in the 1950s. With the raise, the minimum wage is higher than 1950’s inflation-adjusted $6.71, but lower than the 1956 minimum wage of $7.93 in today’s dollars.

The long-term fall in worker buying power is one reason we are in the worst economic crisis since the Great Depression.

The federal minimum wage was not enacted during good times, but during the extraordinarily hard times of the Great Depression. When the minimum wage became law in 1938, one out of five workers was unemployed and job creation was crucial.

President Franklin Roosevelt called the minimum wage “an essential part of economic recovery.” Roosevelt said, millions of workers “receive pay so low that they have little buying power. Aside from the undoubted fact that they thereby suffer great human hardship, they are unable to buy adequate food and shelter, to maintain health or to buy their share of manufactured goods.”

Roosevelt said, “The increase of national purchasing power [is] an underlying necessity of the day.” And so it is today.

Camille Moran, owner of a Louisiana Christmas tree farm and paralegal service, says, “A minimum wage increase could be the most important factor in powering our economy out of the recession.”

Consumer spending makes up about 70 percent of our economy. The minimum wage sets the wage floor.

We can’t build a strong economy on poverty wages.

A growing share of workers make too little to buy necessities — much less afford a middle-class standard of living.

A growing share of business revenue has gone to executive pay and profits.

In 1968, the richest 1 percent of Americans had 11 percent of national income. By 2006, they had 23 percent — the highest share since 1928, right before the Great Depression.

We can’t build a strong, sustainable economy on a 1950s’ wage floor, 1920s’ income gaps and ballooning Wall Street bailouts.

U.S. Women’s Chamber of Commerce CEO Margot Dorfman says, “Now, more than ever, it’s imperative employees are paid a fair minimum wage. It is an unsustainable and dangerous downward spiral to push American workers into poverty and expect taxpayers to pick up the bill for the consequences.”

Dorfman is among 1,000 national business leaders and small business owners supporting the minimum wage increase in a statement at www.businessforafairminimumwage.org.

“Anyone who thinks the minimum wage shouldn’t be raised should try living on it,” says Phillip Rubin, CEO of Computer Software for Professionals in Oakland, Calif.

Michael Shuman, public policy director at the fast-growing Business Alliance for Local Living Economies, says, “Raising the minimum wage to $7.25 is an overdue step in providing a decent, fair livelihood to American workers and creating a truly ‘living economy.’”

If the minimum wage had stayed above the nearly $10 value it had in 1968, it would have put upward pressure — rather than downward pressure — on the average worker wage.

The Let Justice Roll Living Wage Campaign, which I advise, is calling for a minimum wage of $10 in 2010. It’s time to break the cycle of too little, too late raises.

“A fair minimum wage protects the middle class and gives entry level workers some economic breathing room,” says Lew Prince, co-owner of Vintage Vinyl in St. Louis, Mo. “Rebuilding our economy starts with showing hard-working Americans that their work will be rewarded.”

Holly Sklar is co-author of A Just Minimum Wage: Good for Workers, Business and Our Future and Raise the Floor: Wages and Policies That Work for All of Us. She can be reached at: hsklar@aol.com. Read other articles by Holly, or visit Holly's website.

This article was posted on Saturday, July 25th, 2009 at 8:00am and is filed under Labor.

10 comments on this article so far ...

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  1. lichen said on July 25th, 2009 at 4:42pm #

    We need full employment and living wages with benefits in democratic workplaces for all! It is a terrible crime to let wages be so low ANYWHERE, and we need international regulation to crush the possibility of ‘cheaper’ labor now and forever.

  2. Mulga Mumblebrain said on July 26th, 2009 at 1:14am #

    I believe that the median wage in the US is also below the level, adjusted for inflation, of the early 1970s. So this is a question not of the minimimum wage alone. Yesterday I heard an apostle of the latest political con-game, the so-called ‘communitarian’ style of Conservatism being peddled by the UK Tories. This particular confidence-man, or his interlocutor, a Ms Doogue, even used the expression ‘compassionate conservatism’ apparently, although it was on radio, without breaking into wide smirks or uncontrollable guffaws of self-satisfied mirth.
    The con-artist was apparently a professional God-botherer of some type, but his particular brand of mambo-jambo escapes me. He was not a Rabbi, as La Doogue was not suitably ingratiating. The gist of this new con is really Tony Blair’s ‘Third Way’ re-hashed for a new generation of the gullible. But, in passing, he let slip a little nugget of information. Apparently, in 1976, the bottom 50% of the UK wealth distribution held 12% of the country’s wealth. Today the bottom 50% holds 1%. While the good padre feigned outrage at this result, exactly the outcome that capitalism is designed to produce, he advocated a redistribution, so that the proles might have sufficient capital to become good little capitalists themselves. By now I was yelling a bit, and had kicked the radio over, but I received no answer to my demented demand that he explain what would happen when this new generation of ‘little capitalists’ had been robbed of their pelf by the Big Boys again, as would inevitably occur under capitalism.
    Of course the intellectual incoherency of such pabulum doesn’t stop Rightwing ideologues like La Doogue, who never saw a Big Business posterior she did not wish to kiss, from gushing in its praise. It does the two things essential for any new political con-game. It makes clear that capitalism is inviolate, and must merely be ‘reformed’ before the serfs grow restless, and it treats the public as idiots who can be made to swallow any rubbish as long as they are brainwashed forcefully enough.
    What needs restating again and again is that market capitalism is a neo-feudal project, and when it drives down wages and conditions, increases income and wealth inequality, oversees the destruction of all public services and provision, and sees the common wealth flogged off in privatisations, it is working exactly as intended. These are not faults in the system. This is how it is designed to function.
    The people empowered by market capitalism, and who entrench its power into every nook and cranny of existence, are psychopaths. They do not like the rest of us, or one another, for that matter. They see us as competition or outright enemies. They see life as an exercise in getting the better of everyone else, and of standing atop the dung-heap, crowing your own self-admiration.They play dirty. They have no empathy for other humans or other creatures. They are indifferent to our lives. They have gigantic egos and no compunction in lying or using coercion or violence. Most worrying, they are not total imbeciles. While mobilising a cretins’ Crusade of anthropogenic climate change denialism, ‘incentivising’ the imbeciles of the Right to spout bulldust on a topic they are intellectually unequiped to deal with, the elites know the truth. They know that the greatest calamity in history is upon us, and whatever they have planned to protect their interests, I’ll bet the rest of us don’t feature in their plans. Not in a nice way, that is.

  3. mary said on July 26th, 2009 at 4:39am #

    Mulga -How about just £6.40 an hour when the UK minimum wage is £5.73?

    Ivan Lewis, Foreign Office Minister, member of the Labour Friends of Israel parliamentary lobby group, Jew and sex pest* at the workplace, has the Middle East portfolio. He boasts on his website about his links to the Jewish charity, the ‘Fed’ in his Manchester constituency and the marvellous work they do for the 30,000 strong Jewish community. I was looking at their website and notice they have a vacancy for a Family Support Worker and are offering the princely sum of £6.40 an hour. Surely this very well funded and also state supported organization could and should be offering a lot more for such a responsible position?

    Incidentally he has just fuelled the flames a little more by saying he is alarmed at the recent rise in anti-Semitism. http://www.fco.gov.uk/en/newsroom/latest-news/?view=PressS&id=20605918

    His boss Miliband is also Jewish, reportedly having 100 relatives in Israel and is also a member of the LFoI. What chance have the Palestinians of ever getting justice with this UK Foreign Office input?
    http://jta.org/news/article/2007/11/19/105393/milibandbritish

    * I do have a link to this but it is an article from Murdoch’s News (Screws) of the World (currently the subject of a phone hacking scandal) and is rather grubby.

  4. B99 said on July 26th, 2009 at 5:44am #

    Geographically, for capitalism the Earth is a profit-surface. Capital is invested here, disinvested from there – all to stay one step ahead of the historical falling rate of profit. This process is carried out at various geographic scales, from mega-massive investments in China to dis-investments in the US/UK rustbelt, or for that matter, Haiti and much of the underdeveloped world.

    The cost of moving goods, or electronically providing services has declined precipitously over the decades so factories are not necessarily tied to their resource removal areas. Thus, the major expense factor for most firms is the cost of labor. Hence China, with 1.3 billion people, the bulk of whom are the peasantry or proles. They are paid squat, benefits are few, hours long. China is the go-to guy for the time being, though competition is expected to substantially increase from India (1.2 billion people), an even poorer and cheaper nation to do business in.

    This scenario will likely play itself out with falling incomes throughout the world in a global race to the bottom. Of course, capitalists could eventually abandon China and India as cheaper costs of labor emerge elsewhere. However, both countries also have large middle classes that will consume the cheaply (and poorly) made products. Eventually there will be little use for the traditional industrial powerhouses – with their relatively high costs of labor and aging populations. Of course, domestic industries may once again flourish in the US, Japan, and Europe, but the economic and political power of China will make it exceedingly hard for these countries to say no to Chinese exports.

    All this proceeds as China continues to poison its own atmosphere, ground, and water – its polluted air and dessicated soils jet-streamed around the Northern Hemisphere to contaminate skies and lungs elsewhere. So it’s a race, of maximum profit for capital versus the collapse of the global eco-system. Marx said that within capital are the seeds of its own destruction. He got the mechanism about half right.

  5. Don Hawkins said on July 26th, 2009 at 5:55am #

    And B99 China get’s to see major effects first from climate change nature of the beast and the States not far behind. Take a look at the temperatures in the Northwest the next few day’s. Texas right now drought California not far behind. Herculean effort comes to mind and also happyland in clown town USA.

  6. B99 said on July 26th, 2009 at 6:16am #

    Yes Don, I’m putting climate change in the US and severe weather anomalies under the umbrella of global eco-system collapse.

    Then what? Global fascism or local reorganization along egalitarian lines? More likely a mix.

  7. Mulga Mumblebrain said on July 26th, 2009 at 8:05pm #

    I think that your analysis regarding China, B99, might be a little pessimistic. China’s one-Party state seems to me to be an advantage, certainly in comparison with the sham democracies in the West. In China people rise to the top due to personal ability, and the gene-pool is skewed towards technocrats. I believe most of the current top leaders have degrees in higher education, including engineering. As far as the ecological crisis goes this has resulted in the Chinese rationally appraising the situation, and investing heavily in research, development and installation of renewable technologies. Very soon, if not already, China will be the global leader in solar, wind and renewable biomass power production, and will reap the massive rewards to come from these industries. Even with coal, China’s power stations are becoming increasingly of the highest efficiency available. Carbon sequestration is being debated hotly, but if anyone can pull it off, I’d bet on the Chinese. The Chinese, moreover, like the Indians, are not falling for the Western three card trick of being set up as the global villain in greenhouse emissions, when the West is responsible for 80% of the emissions currently in the atmosphere and still produces more per capita than the poor world.
    In comparison to China we inhabit a world of fraudulent ‘democracy’where a tiny political caste engages in pretend competition, while being ideologically near identical, and where real power is in the hands of the hereditary and parasitic business elite. Political parties are openly bought and sold by campaign contributions, and maintenance of vested economic interests is the paramount concern of politics. Politicians retire to richly rewarded sinecures with the business interests they latterly served, getting their corruption a posteriori and to no apparent detriment to their ‘reputations’. The election process is an absolute fraud, with promises made that are routinely broken, the public’s worst impulses in greed, racism, xenophobia, downward envy all manipulated and the result settled by as little as 30% of the votes in ‘first past the post’ systems like the UK. Even in Australia, where we have preference voting, the votes of nearly 50%, or even more than 50% on occasion, are thrown into the proverbial waste-bin, and regimes, particularly of the Right, and the recent Howard abomination in particular, govern against the losing fraction, often with truly vicious policy. Moreover, by definition, universal suffrage gives an equal vote to the racist, the cretin, the ideological fanatic convinced that anthropogenic climate change is a vast Communist conspiracy to destroy capitalism, as it does to the humane and knowledgeable. Is it any wonder, given the ubiquity of mental, psychological and spiritual pathology that is so plain, that democracy so often returns monsters to power?
    Needless to say this perverted ‘democratic’ system has proved utterly incapable of solving our climate change calamity. The system has placed the economic interests of fossil fuel businesses before all else, completely as expected as these interests are rich political benefactors to both major parties. Renewables have been actively sabotaged, as they are nascent industries who have not yet bought themselves a place in the halls of power.
    The whole sordid mess is exacerbated by the ‘Free Press’, in fact a sewer of extreme Rightwing ideological conformity and repression of all contrary opinions. The ‘free society’ we delude ourselves into imagining we inhabit is, in truth, a kleptocracy, run by hereditary plutocrats, employing political stooges to do their dirty work of keeping society under a tight leash, both groups being comprised chiefly of psychopaths and characterpaths devoid of conscience. Give me the Chinese system any day.

  8. B99 said on July 27th, 2009 at 7:18am #

    Hope you are right Mulga about China. I’m aware of efforts there to adopt and innovate environmentally sound technology. But I also understand they have the world’s largest coal reserves and 1.3 billion people to provide energy (and cars) to. I don’t think anyone has been able to say (with honesty) that energy production from coal will be some day be clean. Yet environmental innovation has to proceed apace, in fact, it has to outpace the rate of industrial growth. That’s a tall order for a nation going full-speed ahead in both domestic and global economic ambition. I know I don’t want to buy their effing cat and dog food, nor do I want their toys or toothpaste. In fact, if China did not already own us I think we should stop imports from coming in unless fully inspected (that would be an impermissable impediment to capitalism of course, which is why we grossly underfund import inspection). Of course, our own capitalist-produced products are also suspect, but permitting plastics in pet food and anti-freeze in toothpaste is the mark of an industrial system that has lurched out of control. In opening wide its economy to capital (including Western capital) China has not stayed on top of quality control (though I suspect executions of officials may serve to correct this weakness!).

    Indeed, western (read: US) commercial interests are fighting greenhouse gas emissions international regs because India and China are not made subject to them. But these same corporations that want no mandatory regulations are itching to get into China and India (if not already in) so that they too can enjoy their reduced-regulatory – environment – and with the world’s cheapest labor.

    I, of course, pretty much agree with your take on western political systems. I don’t have much hope for the future in this regard, especially as ecological collapse becomes increasingly evident. I don’t have faith in the Chinese either. Things are pretty much acclerating down a black hole worldwide. Don’t imagine I’ll live to see what emerges out the other side.

  9. Mulga Mumblebrain said on July 27th, 2009 at 10:46pm #

    B99, my point is that the Chinese system can learn from its mistakes, whereas the Western system, dominated by the vested interests of an hereditary parasite class, only answers the demands of that class, despite the democracy facade. Only a few years ago Chinese airplanes were falling from the skies with regularity. Not any more. Chinese mines also appear to be getting safer, and I’ll bet product contamination will be cracked down on too. I have faith in the Chinese because they are the last hope we have, as the West is morally, spiritually and intellectually defunct, its only remaining advantages in arrogant delusions of superiority and in the apparatus of and inclination towards violence and murder.

  10. B99 said on July 28th, 2009 at 5:56am #

    Well Mulga, I hope you are right about China, but I remain pessimistic about the global course of human events in the coming decades and century. To me it seems that China’s economic system is pretty much unbridled capitalism and its social system is shut up or you’ll be busted. I don’t think that the content of DV would be tolerated for long in China.

    What passed for communism in China was a dismal failure (once it made gains over the dynastic period and the European/Japanese hegemonic period). So it is no surprise that their airplanes crashed and their mines collapsed and millions starved. That things are somewhat better today may mean that they had no where to go but up. And this upward movement may mean going in a direction that is less and less distinguishable from western style capitalist ‘democracies’ but without the pretense of liberty. And if they become the lone superpower, we are back to square one. Beware of swollen heads.

    Maybe if they turn deeper into Confucian ideals there will be hope.