Make It

Adjusted for inflation, the federal minimum wage is worth less than 50 years ago

Ken Weinstein, small business owner, pays his employees a minimum of $8.50 an hour, $1.25 higher than the federal and state minimum wage where he’s based.
Photo: Michael Schweisheimer
Ken Weinstein, small business owner, pays his employees a minimum of $8.50 an hour, $1.25 higher than the federal and state minimum wage where he’s based.

Nearly seven years after the federal minimum wage was raised to $7.25 an hour from $6.55, it has remained stagnant despite the increasingly heated debate over better pay and worker protections.

But that hasn't stopped Ken Weinstein from paying his workers more at his two restaurants in Pennsylvania, where the state minimum wage matches the federal floor.

Weinstein owns two Trolley Car Diners in Philadelphia, and decided two years ago to increase the minimum wage for his 75 employees to $8.50.

"It's a competitive thing — you certainly get better employees by paying them more," said Weinstein, who supports a $12 an hour federal minimum wage. "We have a stable workforce, and it's partly due to treating our employees well, and paying them more than our competitors."

Despite periodic increases, the buying power of the federal minimum wage hasn't kept up with inflation, according to the Bureau of Labor Statistics. Data show that in 1968, the federal minimum was equivalent to $10.90 in 2015 dollars, nearly $4 higher than today's rate.

Across the country, 29 states and Washington, D.C., currently have wages above the federal floor, according to the National Conference of State Legislatures.

California and New York are set to soon have the highest minimum wages in the nation, after deals were struck by their governors to raise them to $15 an hour by 2022 and 2018, respectively, with slower increases for smaller businesses.

Many big cities from Los Angeles to Seattle have also independently hiked their local minimum wages.

The Obama administration has also taken some action on wages, with the Department of Labor enacting sweeping changes to overtime regulations. By December, more than 4 million salaried employees earning $23,660 to $47,476 annually will be eligible for overtime pay.

And over the past two years, major players including Target, Wal-Mart and Facebook have joined the wage fight, increasing pay for workers amid an ongoing battle over whether higher pay and benefits are better for businesses.

For higher-wage advocates, the momentum is a great start, but more work needs to be done.

"It's not acceptable," Holly Sklar, CEO of the advocacy group Business for a Fair Minimum Wage, said about the seven-year stretch at $7.25. "The whole point of the minimum wage is to have it go up regularly. It shouldn't sit still every year when the cost of living is going up. The minimum wage is losing value."

But not everyone on Main Street is ready to pay more. Opponents argue that mandating higher wages will hurt smaller companies that may not have the sales or support to take on the increase plus the added pressure and costs for other regulations, including health-care reform and overtime pay.

Members of the conservative lobbying group the National Federation of Independent Business have opposed wage increases at state and local levels in recent years, and are against hiking the federal minimum wage, said spokesman Jack Mozloom.

"Our members don't feel they can absorb the increase and the increases are unrelated to their businesses," Mozloom said. "Whether they have the sales to support higher labor costs is something politicians can't answer."

The idea that presidential candidates like Hillary Clinton would support raising wages as high as $15 an hour at the state and local levels is "very troubling for those in the Midwest and the South, where the cost of living is lower. That would hurt them," Mozloom said. Donald Trump has wavered on plans to enact a higher minimum wage, telling NBC in May that "states should decide" their own wages, for competitive reasons.

Weinstein disagrees with the notion that a federal minimum wage increase is bad for Main Street, and said higher wages haven't hurt his business. In fact, he's set to open up a third location next summer.

"If we all end up paying our employees more than we do now, they will have more money to spend at our businesses and products — there are benefits to area businesses," he said.