What the Minimum Wage Should Really Be: $21.72 Per Hour


By Alden Wicker

NEW YORK (Learnvest) — Last week, in his State of the Union address, President Barack Obama proposed raising the minimum wage to $9 and tying it to cost-of-living increases — a radical move, according to Republicans, who say it would lead to layoffs. (A debatable stance, according to research we’ve covered.)

But according to a 2012 study, Obama’s proposed increase is paltry.

That’s because worker productivity has been steadily increasing, while the minimum wage — increased to $7.25 in 2009 — hasn’t even kept up with the cost of living. Check it out the chart here.

“Real” minimum wage is the dollar value of the minimum wage taking into account inflation. It reached a high in 1968, but has lost ground since then, ensuring that even full-time workers on minimum wage live below the poverty line.

A single mother of one would have to work 40 hours a week all year with no days off to earn enough to barely lift her and her child above the federal poverty line of $15,130. (The poverty line that is in itself a controversial measure of actual poverty.)

In short, employees have been providing more and more value to employers, while employers have been valuing them less and less.

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