Why "$15 Now" Has Nothing to Do With Inflation, Productivity, or a Living Wage

Why “$15 Now” Has Nothing to Do With Inflation, Productivity, or a Living Wage

Maxford Nelsen
April 17, 2014

Originally published by PubliCola on 15 April, 2014

The frenetic push for a $15 minimum wage in Seattle has some sensible observers asking the question: Why not $14 or $16? And if increasing the minimum wage is good for the economy, why not boost it to $50 an hour?

At this juncture, minimum wage advocates typically chuckle nervously and tell the impertinent questioner to calm and down and be reasonable. After all, nobody is arguing for anything that drastic.

Admittedly, the current state minimum wage does not go as far as it did in 1968. But 1968 was the year that the purchasing power of the minimum wage in Washington hit its all-time high.

When pressed for specifics, though, proponents typically rely on three arguments to justify a dramatic and arbitrary minimum wage boost: the minimum wage has failed to keep up with inflation, the minimum wage has failed to keep up with productivity, and the minimum wage should be a living wage. None of these benchmarks stand up to scrutiny.

The refrain that the minimum wage has failed to keep up with inflation is a well-worn progressive talking point. Proponents typically compare the purchasing power of the minimum wage in 1968 ($10.79 in today’s dollars) to the current value of Washington’s minimum wage ($9.32). Admittedly, the current state minimum wage does not go as far as it did in 1968.

But 1968 was the year that the purchasing power of the minimum wage in Washington hit its all-time high. The average purchasing power of the minimum wage in effect in Washington (sometimes the federal minimum was higher, sometimes the state wage floor was higher) since the creation of the minimum wage in 1938 is $7.79, well below the current rate. In other words, our current minimum wage is not out of line with its historic value.

Labor advocacy group Puget Sound Sage recently repeated another favorite statistic of the #raisethewage crowd: If the minimum wage had kept pace with the productivity of the average worker, it would be north of $20 an hour, making the push for $15 seem reasonable.

There is a hefty problem with this argument, however.

You can read the full op-ed on PubliCola here.

- Labor

Maxford Nelsen

Director of Research and Government Affairs

mnelsen@freedomfoundation.com

As the Freedom Foundation’s Director of Research and Government Affairs, Maxford Nelsen leads the team working to advance the Freedom Foundation’s mission through strategic research, public policy advocacy, and labor relations. Max regularly testifies on labor issues before legislative bodies and his research has formed the basis of several briefs submitted to the U.S. Supreme Court. Max’s work has been published in local newspapers around the country and in national outlets like the Wall Street Journal, Forbes, The Hill, National Review, and the American Spectator. His work on labor policy issues has been featured in media outlets like the New York Times, Fox News, and PBS News Hour. He is a frequent guest on local radio stations like 770 KTTH and 570 KVI. From 2019-21, Max was a presidential appointee to the Federal Service Impasses Panel within the Federal Labor Relations Authority, which resolves contract negotiation disputes between federal agencies and labor unions. Prior to joining the Freedom Foundation in 2013, Max worked for WashingtonVotes.org and the Washington Policy Center and interned with the Heritage Foundation. Max holds a labor relations certificate from the University of Wisconsin-Madison and graduated magna cum laude from Whitworth University with a bachelor’s degree in political science. A Washington native, he lives in Olympia with his wife and sons.