Inflation And Lowering The Minimum Wage.

The minimum wage is effected by inflation, which basically means the more money we print the less money is worth, but it evens out because we have more of it.  If there were only one dollar of currency in the US it would be ridiculously valuable because it represents everything of any value in our country, every product and service.  Then if you printed another dollar, it would be very valuable too, but now you have two so they’re each half as valuable as the one bill was, and so forth.  Print a few trillion dollars and you get about the level of worth we have now where a dollar is worth about a dollar.

But we keep printing more money because it helps the economy in short-term growth.

The net effect of this is that money loses it’s value and it takes more money to buy anything.

So to get back to the title, how does one go about lowering the minimum wage?  By not raising it to keep up with inflation.

The federal minimum wage was raised in 1997 to $5.15 an hour.  It was raised again in 2007 to 7.25 an hour, but that just kicked in this july.  From 1997 to 2009 $5.15 decreased in value to $3.83, effectively lowering the federal minimum wage to $3.83 an hour.

Shouldn’t minimum wage automatically bump up every year to meet inflation?  Doesn’t every year that it doesn’t lower minimum wage and give more and more of our country to corporations?


About agnophilo

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6 Responses to Inflation And Lowering The Minimum Wage.

  1. GodAintGood says:

    excellent point, but we’re unlikely to see legislation anytime soon to reflect that.first dammit!

  2. If we’re critiquing the current status of minimum wage, I think a one-size-fits-all minimum wage for the entire country is probably not appropriate, given the variations in cost of living. Ideally, I suppose such variations, in addition to the rate of inflation, such be taken into consideration.We should probably acknowledge that corporations are not the only employers of minimum-wage workers, and that raising the minimum wage results in less jobs for those companies that can’t afford to give everyone in an entry-level position a raise. I imagine that these are the objections that others will raise to your proposal. I’m not suggesting that we shouldn’t raise the minimum wage, but it’s always helpful to present both sides.I think inflation is a problem that needs to be addressed itself. If the “new money” that is printed were distributed equally (like what happens when stock shares are split), then it wouldn’t be an issue. The net result, however, is that, as you note, salaries (that is, present and future incomes) are effectively reduced and savings (past incomes) are diminished. Raising the minimum wage does not address the latter situation. While interest rates typically match inflation, the idea of a savings account, at least in my mind, should result in some growth, especially in a capitalist society.

  3. The_ATM says:

    This is a great idea for a post.  Some say the FED plans to decrease the value of the dollar by half over the next 14 years.  I bet minimum wage will not even get close to doubling.Another interesting point, when the FED calculates inflation, it excludes important metrics like oil and wheat prices–two areas that will hit the consumer hardest.I think the problem that needs to be addressed is inflation, not minimum wage.  Not only in the past has the FED’s ability to print money allowed us to fight wars we should not have been involved in ( and hide the cost from citizens ), it also creates the worst kind of taxation, devaluation of our currency.Also, there is the whole SDR thing with the IMF essentially printing money.Too many citizens assume the benevolence of central banks controlling interest rates and inflation.  Politicians ignore it since short term growth helps them get re-elected.@stephenandginny – I think we have the same idea.

  4. agnophilo says:

    @stephenandginny – I’m pretty sure savings accounts make money above and beyond the rate of inflation but I’m no expert.  I can’t imagine people would bother having them otherwise.And I’m not advocating raising the minimum wage, I’m advocating keeping it the same rather than lowering it.

  5. mrcolorful says:

    We should just stop inflating the money supply…

Speak yer mind.

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