Back in July 2007, Sen. Ted Kennedy vowed to raise the minimum wage to $9.50 an hour. That was just after the Fair Minimum Wage Act of 2007 raised the federal minimum amount to $5.85 from $5.15. That increased to $6.55 in 2008 and $7.25 in 2009 last year. The Obama-Biden campaign pledged to push for the raise to $9.50 as well, stating:
As president, Obama will further raise the minimum wage to $9.50 an hour by 2011, index it to inflation and increase the Earned Income Tax Credit to make sure that full-time workers can earn a living wage that allows them to raise their families and pay for basic needs such as food, transportation, and housing -- things so many people take for granted.
So far, nothing has happened in that regard. And given the make-up of the House of Representatives come January, probably nothing will happen for the next two years, although it would be no surprise to see some of the more radical Reps elected this month co-sponsor a bill to abolish the federal minimum wage altogether.
Meanwhile, even though inflation is running at historically low levels, less than 1 percent this year, the value of the minimum wage continues to erode. And, after adjusting for inflation over the past four decades, is still worth a lot less than it was in 1968. How much less can be seen is this chart from the Economic Policy Institute:
In other words, after inflation is accounted for, a minimum-wage earner in 1968 made approximately $4000 more than a minimum-wage earner today.
This continued erosion is what makes the Obama-Biden pledge to can the current haphazard, raise-it-whenever-you-can-get-the-votes approach so attractive. Their method is essentially the one proposed by Heidi Shierholz at EPI a year ago. The minimum wage would be set at 50 percent of the average wage of production and non-supervisory workers. Every year thereafter, the minimum wage would be adjusted to reflect changes in the average wage.
Of course, there's a potential drawback. The average wage may not just stagnate, it may fall. For instance, new GM employees under the two-tiered hiring system are getting $14 an hour, considerably less than new workers got who were hired before 2007. But for the moment, implementing an inflation-adjusted, average-wage method of maintaining the minimum wage's buying power - without having to depend on the fickle ideological swings of Congress - would be a boon to America's lowest-paid workers.