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The federal minimum wage has been 7 dollars and 25 cents since 2009. As prices rise due to inflation, calls to increase it have grown louder. Resistance to raise the minimum wage has grown as well. Today we’ll be going over the history and implications of raising the minimum wage.

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The idea of the minimum wage originated due to sweatshops in industrializing Western economies. In the early 1900’s, many states enacted minimum wages but were declared unconstitutional by the Supreme Court in 1923. Franklin Delano Roosevelt attempted a federal law in 1933 but this was also struck down. Following threats to pack the Court over various New Deal policies, the Justices caved and allowed the first minimum wage in 1938.

The first minimum was set at 25 cents an hour or around 4 dollars and 50 cents in today’s dollars. In 1968, it reached its peak at 11 dollars and 39 cents in today’s dollars. Since then, it has fallen to a little below the historical average.

In recent years, calls to raise the minimum wage to 15 dollars an hour has grown. Proponents say it would decrease the number of people living in poverty by enforcing a living wage. Opponents say it would cause people to lose their jobs to automation in low margin industries and raise prices on consumers.

In 2021, Democrats attempted to pass a 15 dollar minimum wage through the budget reconciliation process to avoid a potential Republican filibuster. The Congressional Budget Office found that it would raise the federal deficit by 54 billion dollars over the next ten years, so the reconciliation process was not allowed. The CBO study found that a 15 dollar minimum wage would benefit 17 million people and raise almost a million out of poverty. That said, it would cause 1.4 million to lose their jobs, raise prices, and slightly decrease economic output.

The minimum wage is an issue where states act when the federal government won’t. 29 states and Washington D.C. have all raised their minimums while some localities have gone even further. Some areas even have provisions for the minimum wage to increase along with inflation to avoid the need of legislative changes.

Having states and localities set their wage minimums accounts for local needs that federal policy most likely would not. For example, someone living in San Francisco California needs a much higher salary to pay their bills than someone living in Jackson Mississippi.

How do you think we should balance the federal minimum wage with local needs? Do you think it’s an issue that can be solved by the states? Don’t forget to like, comment, and subscribe. Thank you for watching and have a great day.