Twelve Dollar Minimum Wage
By Can the nation afford a $12 minimum wage in 2020? The answer is obviously yes on the face of it. But the always useful Economic Policy Institute released a report showing that the answer is in fact yes.
A federal minimum wage of $12.00 in 2020 would return the wage floor to about the same position in the overall wage distribution that it had in 1968.
In 1968, the minimum wage stood at 52.1 percent of the median wage.5 By 2014, this ratio had fallen to 37.1 percent.
Raising the federal minimum wage to $12.00 by 2020, under the conservative assumption of no real wage growth at the median, would leave the ratio at 54.1 percent, just above where it was in 1968.
If we assume just 0.5 percent annual real wage growth for the median worker between now and 2020, the ratio would fall to 49.9 percent.
A broadly similar story emerges when using the average hourly earnings of nonsupervisory production workers, instead of the median wage, as a benchmark.
The federal minimum wage was equal to 53.0 percent of the average production worker wage in 1968. By 2014, this ratio had fallen to 35.2 percent.
Raising the federal minimum wage to $12.00 by 2020 would restore the ratio to 51.4 percent (under the conservative assumption of no real wage growth for production workers), just below its 1968 value.
The strong rise in average worker productivity and the increase in the age and educational attainment of low-wage workers in the last five decades suggest that the 1968 benchmark may understate the economy’s capacity to support a higher national wage floor in 2020.
The compression of median wages across the U.S. states over the last five decades, especially the catching up of lower-wage states, means that the federal minimum wage has less impact on low-wage states today than was the case in 1968.
What I want to know is whether we can have a $20 minimum wage by 2020.