Indeed, if the federal minimum wage had kept up with worker productivity since 1968, the inflation-adjusted minimum pay would be $24 per hour. Working people should share in the wealth they help generate, and our wages should rise as we become more productive, according to the labor movement.
In 2022, how would the minimum wage be adjusted for inflation?
President Biden stated at his State of the Union address that bringing inflation under control was a primary goal, and he told businesses, “Not your wages, but your costs.” However, many firms across the country have not responded to current health or economic problems by decreasing salaries. And, in certain regions of the country, salaries are only going higher by law, as many municipal minimum wage legislation increase their rates in response to changes in the consumer price index (CPI). We present a projection of what businesses can expect during these difficult economic times, not an economic prognosis, so they can budget appropriately in the coming months and prepare for near-term (July 1) and future (January 1, 2023) necessary wage rate increases.
Running a business has been anything but simple during COVID-19. We’ve all heard about the “Great Resignation” and how it led to “wageflation” ( “According to Forbes, “a sudden, unexpected, and instantaneous surge in pay based on unique market conditions”). With the addition of inflation, some businesses may find themselves in an even more vulnerable position. Although the mid-year minimum wage increases (July 1, 2022) are still four months away, some jurisdictions have already announced their rates; the differences are notable and demonstrate the impact rising inflation can have on wages in jurisdictions that adjust their minimum wage in response to changes in the CPI.
The minimum wage in both the City of Santa Fe and the County of Santa Fe was CPI-adjusted from $12.32 to $12.95 per hour on March 1, 2022, an increase of just over 5%. The minimum wage in the District of Columbia will increase from $15.20 to $16.10 per hour on July 1, 2022, representing a nearly 6% increase. The greatest stated increase to date belongs to the City of Los Angeles, California, where the yearly adjusted minimum wage will rise from $15.00 to $16.04 per hour on July 1, 2022, a nearly 7% increase.
Factors that may impact why minimum wage CPI adjustments varies from one location to another range from the apparent to the obscure, and include, for example:
- The minimum pay rate prior to the change. The higher the existing minimum wage, the more likely there is to be a raise “Sticker Shock” is a rate that has been changed.
- The adjustment’s lookback period, as well as inflation throughout that time. There is a gap between the end of the lookback period and the start of the adjusted wage rate, but depending on how much time passes between these dates and how inflation performs in the interim, the rate bump could exceed inflation at the time the rate goes into effect or throughout the year it is in effect; of course, during the pre-adjustment period, the opposite could be true, with other items like food and consumer goods prices rising while the adjusted wage rate remains in effect; of course, during the pre-adjustment
- Whether CPI-U (Consumers) or CPI-W (Workers) is used in the adjustment (Workers). These are various inflation rates, which helps to explain why two cities with the same pre-adjustment minimum wage may have different adjusted rates.
- The adjustment’s working area. To be competitive, a smaller city can go beyond its borders and apply the CPI index to a much larger metropolis further away.
- Whether or not the law sets a limit on the annual rise. This could happen in general or by employing a different rate of inflation than the actual rate of inflation “whichever is less” standard (i.e., the rate of inflation or X percent, whichever is less).
Numerous further municipal mid-year rate adjustments will occur throughout California on July 1, 2022, so businesses should plan for a potential “wagequake” across the state. However, tremors may not be limited to the West Coast, as municipal minimum wage rates in the Midwest (Illinois) and the Mid-Atlantic (Maryland) will also alter. While concerns about near-term wage changes are primarily local, firms across the country should prepare for the potential that inflation does not moderate sufficiently through 2022, resulting in state-level rate increases on January 1, 2023. (or December 31, 2022, in New York). This could effect both exempt and non-exempt employees if it happens. States frequently add a multiplier to the minimum wage to determine the minimum salary required for the executive, administrative, or professional exemption to apply; a state-law inside sales exemption could face a similar minimum wage multiplication scenario. In addition, the state may annually increase the exemption’s minimum hourly rate for specified hourly professionals (or medical in California).
Although we don’t have a crystal ball to look into the future, we may forecast that things will become more difficult, just like wage and hour regulations.
What would be the minimum wage adjusted for inflation in Canada in 2021?
“In no Ontario municipality does $15 an hour give a livable wage,” the Star editorial board noted in November, with some firms, employees, and advocates claiming the increase is years late and won’t do anything to offset the province’s ever-increasing expenses of doing business.
According to the site’s definition, the living wage is computed based on the needs of a family of four with two parents working full-time throughout the year.
Cost of living: According to a Policy Alternatives research released the same year, the living wage in Charlottetown, PEI in 2020 was $19.30 per hour.
Cost of living: According to the McGill Tribune, campaigners have been lobbying the province to raise the minimum wage to $18 to help with living expenses. Increasing living costs, according to a coalition of anti-poverty advocates, might force employees deeper into poverty.
According to a research by the CRHA, an association that represents human resources professionals, Quebec will see record wage increases this year. According to the report, employers in Quebec might offer employees compensation rises of 2.9 percent on average in 2022, the greatest gain in a decade.
Minimum wage: $11.81 (as of October 1, 2021), with annual inflationary adjustments on October 1st.
Cost of living: Once New Brunswick raises its minimum pay in April, Saskatchewan will have the lowest minimum salary in the country.
According to a report released in March by the Regina Anti-Poverty Ministry, one out of every four Regina children is currently living in poverty.
Minimum wage: $15.20 (as of April 1, 2021), plus an annual inflation adjustment on April 1st.
Cost of living: According to a 2019 assessment by the Yukon Anti Poverty Coalition, Whitehorse’s living wage was $19.07 per hour, owing to increases in the cost of living, child care, and transportation.
When was the last time the minimum wage was updated for inflation?
Instead, we’ve turned around and gone the opposite way. Congress ceased increasing the minimum wage in lockstep with productivity after the late 1960s. Instead, Congress has allowed the minimum wage to fall in real terms during the last 50 years. That is, even though today’s workers live in a more richer society, minimum-wage workers in the past were paid more than minimum-wage workers today.
Indeed, the hourly minimum wage has almost never been lower than it is currently, dating back to 1950. Of course, 1950 is a long time ago, and the United States is today a very different country. Our gross domestic product per capita is now four times higher. At the time, a UNIVAC computer was 38 feet long, weighed eight tons, and had about 1/1,000,000 of the memory of today’s cheapest iPhone.
Despite this, everyone working a federal minimum-wage job in 2021 gets paid less per hour than they would have been paid in 1950 (inflation adjusted $8.25 or thereabouts). The inflation-adjusted minimum wage has only been lower than it is today twice in the last 71 years: in 1989 and from 2004 to 2006.
In 2021, how would the minimum wage be increased for inflation?
Consumer prices rose 5.3 percent in August compared to the previous year, causing some anxiety as the economy recovers from the pandemic. Food prices at home increased by 3%, while food prices away from home (i.e. restaurants) increased by 4.7 percent, according to the Bureau of Labor Statistics’ latest release this week. Rents and energy prices both increased by roughly 9%.
One point of worry for employers and employees in the United States is that activists frequently exploit inflation data to support their campaign for a $15 minimum wage, or even a higher salary of $23 per hour, despite the fact that study shows such steep rises will destroy millions of jobs.
Remember, if we kept up with inflation, the minimum wage would be $23/hr right now. $15 is a good middle ground. #RaiseTheWagehttps://t.co/44l6Rqln0F
Despite the fact that inflation has risen dramatically in the last year, the so-called “The Fight for $15” is still not based on a consumer price index. If the 2009 federal minimum wage increase to $7.25 per hour were indexed to climb with inflation, it would equal $9.22 today, according to Bureau of Labor Statistics data up to August 2021.
If the minimum wage were to be adjusted to the level in 1990, it would be $7.17 now. No matter how you slice it, these data don’t even come close to, let alone support, the $23 hourly rate proposed by the union-backed One Fair Wage.
Indeed, the $15 minimum wage goal that several states and municipalities have already enacted has no precedence in history. An organizing director for the Service Employees International Union’s Fight for $15 campaign joked about the absence of genuine analysis informing their main policy goal at one meeting, saying: “We decided that $10 was too low and $20 was too much, so we settled on $15.”
Unfortunately, these draconian minimum wage targets, which lack economic justification, will wreak havoc on firms and employees as they try to recover from the pandemic. According to the impartial Congressional Budget Office, the Raise the Wage Act of 2021, which proposes a $15 minimum wage nationwide, may cost the country up to 2.7 million jobs. According to economists from Miami and Trinity Universities’ industry and state-level analyses, the hospitality and restaurant industries would bear the brunt of these effects. Increases above the $15 minimum wage would have an even bigger negative impact on employer costs, and could result in the loss of many more employment.
Why should the minimum wage not be increased?
Since 2009, the federal minimum wage of $7.25 per hour has remained unchanged. Increasing it would increase most low-wage employees’ earnings and family income, pulling some families out of povertybut it would also cause other low-wage workers to lose their jobs, and their family income would fall.
The Budgetary Consequences of the Raise the Wage Act of 2021 (S. 53), which CBO evaluated in The Budgetary Effects of the Raise the Wage Act of 2021, allows users to study the effects of policies that would raise the federal minimum wage. Users can also build their own policy options to see how different ways to increasing the minimum wage would influence earnings, employment, family income, and poverty.
Colorado $12.56
Colorado’s state legislature established a policy in 2006 stating that the state’s minimum wage would be adjusted to keep pace with inflation using the consumer price index. Local governments in Colorado can also set their own minimum wage. In January 2022, Denver’s minimum wage for anyone working more than four hours per week increased to $15.87.
Oregon $12.75 (tie)
There are three separate minimum salaries in Oregon. The amount of money workers in Oregon make is determined by where they live. The state’s basic minimum wage will rise to $13.50 in July 2022. Workers in Portland, on the other hand, will be paid $14.75 per hour, while those in non-urban areas will be paid $12.50.
Maine $12.75 (tie)
Maine adjusts its pay based on the Northeast Region’s consumer price index. Overtime pay is available to employees who earn less than $38,251 per year.
Arizona $12.80
In January 2022, Arizona’s minimum wage was raised from $12.15 to $12.80 per hour. Workers hired by a parent or sibling, casual babysitters, employees of the Arizona state or federal government, and employees of a small firm with less than $500,000 in annual revenue are all excluded from the $12.15 minimum wage in Arizona.
New Jersey $13 (tie)
The minimum wage in New Jersey is $13 per hour for the majority of workers, however there are notable exceptions. Seasonal workers and employees who work for small businesses with fewer than six employees will get a $1.10 reduction in pay. Over the following three years, the state plans to raise the minimum wage to $15 per hour.
Connecticut $13 (tie)
Connecticut’s minimum wage is now $13 per hour, however it will increase by a dollar to $14 per hour in July 2022. If the federal minimum wage ever catches up to or equals the state’s rate, Connecticut’s minimum wage will automatically climb to.5% higher.
New York $13.20
The minimum wage in New York varies based on where you work. The minimum wage in New York City, Westchester County, and Long Island is $15. The rest of the state has a $13.20 minimum wage, which is set to rise year after year until it hits $15.
California $14
Workers in California who work for small businesses with 25 or fewer employees receive $14 per hour, while those who work for businesses with 26 or more employees earn $15 per hour. By 2023, all workers in California, regardless of their employer’s size, will be paid $15.
Massachusetts $14.25
Massachusetts’ minimum wage is required by state law to be at least $.50 higher than the federal minimum wage, yet the state has gone well over $7.25. Massachusetts increased the minimum wage from $13.50 to $14.25 in 2022 as part of the state’s ambition to reach $15 by 2023.
Washington $14.49
For quite some time, Washington has been a leader in terms of high minimum salaries. Seattle approved legislation in 2014 that calls for raising the minimum wage to $15 per hour by 2021. The city’s minimum wage has increased even more to $17.27 starting of January 2022. However, it is not the only city in Washington with a minimum wage of more than $16. Employers in the hospitality and transportation industries must pay a minimum wage of $17.54 in SeaTac, which is home to Seattle-Tacoma International Airport.
Honorable Mention: Washington D.C. $15.50
If the District of Columbia had been a state, it would have won the title of highest minimum wage state. The nation’s capital passed a $15 minimum wage in 2019 and has been increasing it on a regular basis to keep up with the city’s rising cost of living. The minimum wage, which is currently $15.50, will increase to $16.10 in July 2022.
In 1969, what was the minimum wage?
Adapted from the Fair Labor Standards Act’s Minimum Wage and Maximum Hours Standards, 1988 Report to Congress under Section 4(d)(1) of the FLSA.
Early on in the FLSA’s administration, it became clear that applying the statutory minimum wage to all of Puerto Rico’s and the Virgin Islands’ covered industries would have negative consequences for their economies. As a result, on June 26, 1940, an amendment was approved mandating the formation of special industry committees to determine and issue minimum pay levels in Puerto Rico and the Virgin Islands via wage orders. The rates set by industry committees may be lower than the statutory rates in other parts of the United States.
The FLSA was updated by the Portal-to-Portal Act on May 14, 1947. This piece of legislation was noteworthy because it clarified what constitutes compensable hours under the FLSA. A number of U.S. Supreme Court cases had previously addressed issues such as underground movement in coal mines and factory make-ready operations.
Following modifications to the FLSA, the law’s coverage was expanded to include more employees and the minimum wage was raised. The minimum pay for all workers was raised from 40 cents to 75 cents an hour in 1949, and the minimum wage coverage was expanded to include workers in the air transportation business. Except in Puerto Rico and the Virgin Islands, the 1949 revisions also abolished industry committees. A new component was included allowing the US Department of Labor’s Wage and Hour Administrator to control the occurrence of exploitative industrial homework. With no modifications in coverage, a 1955 amendment raised the minimum wage to $1.00 per hour.
The FLSA’s reach in the retail trade sector was considerably expanded by the 1961 amendments, which boosted the minimum wage for previously covered workers to $1.15 per hour in September 1961 and $1.25 per hour in September 1963. For workers newly subject to the Act, the minimum wage was fixed at $1.00 per hour in September 1961, $1.15 per hour in September 1964, and $1.25 per hour in September 1965. With proper authorization from the Department of Labor, retail and service enterprises were authorized to hire full-time students at rates no more than 15% below the minimum wage. Employees of retail trade enterprises with annual sales over $1 million were covered by the modifications, though individual outlets within those covered enterprises were exempt if their annual sales were less than $250,000. The 1961 revisions introduced the idea of enterprise coverage. The revisions increased the number of people covered in the retail trade business from 250,000 to 2.2 million.
With amendments passed in 1966, Congress expanded coverage by decreasing the enterprise sales volume test to $500,000, effective February 1967, and then to $250,000, effective February 1969. Public schools, nursing homes, laundries, and the entire construction industry were all included in the 1966 modifications. For the first time, farms became eligible for coverage if they employed 500 or more man days in the previous year’s peak quarter. For newly covered nonfarm workers, the minimum wage increased to $1.00 per hour in February 1967, $1.15 in February 1968, $1.30 in February 1969, $1.45 in February 1970, and $1.60 in February 1971. Increases for newly subjected farm laborers came to a halt at $1.30 per hour. The 1966 changes made it possible for covered agricultural companies and institutions of higher learning to participate in the full-time student certification program.
In 1974, Congress enacted the Fair Labor Standards Act (FLSA), which included all non-supervisory employees of the federal, state, and local governments, as well as many domestic workers. (In 1976, the Supreme Court ruled in National League of Cities v. Usery that the FLSA’s minimum wage and overtime rules could not be applied to State and local government employees performing conventional government functions.) Except for farm laborers, whose minimum wage rose to $1.60 in 1974, $2.10 in 1975, and $2.30 in 1976, the minimum wage grew to $2.00 an hour in 1974, $2.10 in 1975, and $2.30 in 1976. With the 1977 modifications, parity with nonfarm employees was achieved at $2.30.
The 1977 changes established a new uniform wage schedule for all covered workers by abolishing the distinct lower minimum wage for major agricultural companies (but keeping the overtime exemption). In January 1978, the minimum wage was $2.65 per hour, $2.90 in January 1979, $3.10 in January 1980, and $3.35 in January 1981. The modifications made it easier for businesses to hire students at a reduced wage rate and enabled special exemptions for children aged 10 to 11 to work in agriculture. The overtime exemption for hotel, motel, and restaurant employees was repealed. After December 31, 1981, the $250,000 dollar volume of sales coverage test for retail trade and service firms was gradually increased to $362,500 to account for inflationary effects.
Following the Supreme Court’s ruling in Garcia v. San Antonio Metropolitan Transit Authority et al. in 1985, Congress approved revisions to the FLSA that changed how it applied to public employees. These modifications, in particular, allow state and local governments to reward their employees for overtime hours worked with compensatory time off in place of overtime compensation, at a rate of 1 1/2 hour for every hour worked.
For enterprise coverage of both retail and no retail enterprises, the 1989 amendments introduced a single annual dollar volume test of $500,000 for both retail and no retail businesses. At the same time, the revisions repealed the exemption for small retail businesses from the minimum wage and overtime pay. In every workweek in which they engage in trade or the manufacture of items for commerce, employees of small retail enterprises become subject to minimum wage and overtime pay. On April 1, 1990, the minimum wage was raised to $3.80 per hour, and on April 1, 1991, it was raised to $4.25 per hour. The revisions also reinstated a training wage provision for employees under the age of twenty (at 85% of the minimum wage, but not less than $3.35 an hour), which had previously expired in 1993. Finally, the revisions created an overtime exception for time spent in remedial education by employees, as well as civil money penalties for intentional or persistent violations of the law’s minimum wage or overtime pay provisions.
In 1990, Congress passed legislation requiring the issuance of regulations establishing a special overtime exemption for certain highly competent computer workers earning at least 6 and a half times the appropriate minimum wage.
The minimum wage was increased to $4.75 per hour on October 1, 1996, then to $5.15 per hour on September 1, 1997, as a result of the 1996 revisions. The amendments also established a youth sub-minimum wage of $4.25 per hour for newly hired employees under the age of 20 for the first 90 calendar days after being hired by their employer; revised the tip credit provisions to allow employers to pay qualifying tipped employees no less than $2.13 per hour if they received the remainder of the statutory minimum wage in tips; and set the hourly compensation test for qualifying computer related professional employees at a minimum of a minimum of a minimum wage of a minimum wage of
The minimum wage was increased to $5.85 per hour on July 24, 2007, $6.55 per hour on July 24, 2008, and $7.25 per hour on July 24, 2009. The 2007 amendments increased the minimum wage to $5.85 per hour on July 24, 2007, $6.55 per hour on July 24, 2008, and $7.25 per hour on July 24, 2009. A separate section of the measure calls for gradual increases in the minimum wage in the Commonwealth of the Northern Mariana Islands and American Samoa, with the goal of eventually bringing the minimum pay in those areas up to the federal minimum wage.
This publication is for general information only and should not be viewed in the same way as the regulations’ official statements of stance.
Is the United Kingdom’s minimum wage linked to inflation?
Since their inception in the United Kingdom, the national minimum and living wages have risen every year. However, this does not imply that they have kept up with rising living costs.
Chancellor Rishi Sunak announced an increase in the national living and minimum wages in his Autumn Budget, declaring that the higher rates “guarantee we’re making work pay and maintains us on track to reach our commitment to abolish low pay by the end of this Parliament.”
Every country in the globe has its own system for determining the minimum wage, as well as the amounts that should be paid to different age groups.
Some countries have a minimum pay per hour, whereas others have a minimum wage per working day, week, or month. Many countries still do not have any kind of minimum wage at all.
In general, the national minimum wage in this country rises by roughly 4% per year, in accordance with inflation rates. If the minimum wage does not keep pace with inflation, people will grow poorer despite earning the same amount of money.
Naturally, different countries have varying living costs, inflation rates, and average wages. But, in the broader scheme of things, how does the United Kingdom fare? And who has the world’s highest minimum wage?