The federal minimum wage, covered by the 1938 Fair Labor Standards Act (FLSA), operates as a floor, and states and communities have leeway to set higher standards and cover more workers. Yet today, the federal minimum wage remains far below its historical level and will lose value every year due to inflation. Throughout the 1950s and 1960s, the minimum wage represented nearly 50 percent of average wages for private-sector, non-supervisory workers. But in 2010, that figure had fallen to only 38 percent. The purchasing power of the minimum wage plummeted in the 1980s, when the federal rate did not increase from January 1981 to April 1990.
In 2007, Congress raised the federal minimum wage by $2.10 per hour—to $7.25 per hour—as a first step toward restoring its historical value. But for the minimum wage to have the same purchasing power it had in 1968, it would have to be more than $10 per hour in 2011. Research has shown no job loss results from reasonable minimum wage increases, even when the economy is struggling. On the contrary, to fix the underlying weakness of our economy, we must boost aggregate demand and increase the purchasing power of millions of low-wage workers—and one proven and effective way of doing that is to raise the federal minimum wage.
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