Today’s Minimum Wage is Low by Historic Standards
Today, a minimum wage worker in Colorado can only buy about 75 percent of what a Coloradan making minimum wage could purchase in the late 1960s, despite the fact that the average minimum wage worker today is much better educated and much more productive than minimum wage workers were in the late 1960s.
The Federal Minimum Wage
The modern minimum wage was first passed in 1938. From its creation until the late 1960s, the purchasing power of the minimum wage steadily grew, reaching its peak in 1968. Since 1968, the relative purchasing power of the minimum wage has declined dramatically, which means the income of a minimum wage worker todays buys much less than it used to.
Today’s minimum wage would be $11.12 if it had kept pace with inflation since 1968. The current federal minimum wage is $7.25, where it’s been since 2009.
The Colorado Minimum Wage
In 2006, 53.3 percent of Colorado voters approved the Colorado Minimum Wage Increase Initiative. Also known as Initiative 42, this constitutional amendment raised the minimum wage to $6.85 an hour from the previous level of $5.15, which was the federal level at the time. It also tied the future state minimum wage to the Consumer Price Index, which ensured that the Colorado minimum wage would be adjusted for inflation each year.
Colorado’s minimum wage is currently $8.31 an hour, which is above the federal rate. It would be $11.12 if it kept the same purchasing power as the minimum wage in 1968.
Between 80,000 and 100,000 workers are currently paid the minimum wage in Colorado. This represents about 4.2 percent of the total workers in the state.
Minimum Wage Benchmarks through the Years
Today’s minimum wage is low in many aspects compared to historic levels. The minimum wage hasn’t kept up with inflation or adjusted for the fact the workers are more productive. The minimum wage has also lagged behind the growth of the wages of other workers.
The federal minimum wage is only two-thirds the real value it was back in 1968, and Colorado’s minimum wage is three-fourths its historic value.
The minimum wage hasn’t kept pace with the increase in workers’ productivity. Back in 1968, the minimum wage was worth 33.7 percent of the average output per hour worked; now it has fallen to below 15 percent. Even though workers are twice as productive as they were in 1968, the minimum wage is worth much less.
In addition, the average worker making low wages is better educated than in 1968. Only 17 percent of 1968 workers in the lowest 20 percent of the wage distribution had a college education, compared to 46 percent today. Minimum wage has lagged behind the wage growth of other workers. In 1968, the minimum wage was 52.1 percent of the national median wage. The minimum wage in Colorado today is only 41 percent of the national median wage.
Other states have been gradually increasing the minimum wage over several years back to its historic value. If Colorado wanted to catch up with inflation since the late 1960s, it should adopt a minimum wage of $12.13 by the year 2020.
