15 years later, the federal minimum wage is still $7.25 an hour

The $7.25 federal minimum wage turned 15 years old Wednesday. That is the longest the minimum wage has gone without getting a raise.

When you adjust for inflation, the $7.25 minimum wage has the lowest purchasing power since 1949. And yet, there is not much talk, in Congress or otherwise, about increasing it.

Over the past decade, Congress has debated raising the minimum wage. In fact, the Raise the Wage Act was reintroduced in the Senate last year. But the idea keeps going nowhere. Why? The short answer is congressional gridlock.

“We are in an unprecedented situation in terms of Congress just not taking steps to raise the wage floor,” said Tsedeye Gebreselassie, a senior staff attorney at the National Employment Law Project. She’d like the minimum wage to at least double, in part because Black workers and women are way more likely to hold those jobs.

“It’s such a common sense solution to so many of the issues facing working people,” she said, pointing to issues like the racial wealth gap and gender pay disparity. 

But the reason it hasn’t happened, said labor economist Yuci Chen with the W.E. Upjohn Institute for Employment Research, is there’s concern over what a raise could mean for prices and job opportunities. “Whether it’s going to be through a reduction in employment or increasing output price,” she said.

She also said the federal minimum wage shouldn’t be a one-size-fits-all thing, “because the states are very different in their characteristics, such as industry composition and their cost of living.”

That’s why 34 states and dozens of local municipalities have set a higher minimum wage than the federal baseline. Tia Koonse, legal and policy research manager at the UCLA Labor Center, said that’s good, but leaves a lot of workers out.

“In fact, people aren’t talking about it enough,” she said.

Plus, she pointed to several studies that say raising that wage floor actually stimulates the economy and increases employment.

“And that’s because it’s not a secret: When you put money into people’s pockets, they spend it, particularly when you talk about the poorest people,” Koonse said.

With more states and cities establishing their own minimum wages, the number of workers who earn the federal minimum is going down. It’s now only about 1.3% of hourly employees.