Press Release Economic Policy Inequality Inflation

CORRECTION: $23 Per Hour Minimum Wage? How Our Economy Broke the Link Between Minimum Wage and Productivity

August 18, 2021

Contact: Karen Conner, 202-281-4159Mail_Outline

(Correction: The original post of August 19, 2021 gave the amount as $26 an hour. The correct amount is $23 an hour. A spreadsheet error was found and corrected on March 16, 2022. This post has been updated throughout with the correct figures. See Dean Baker’s post for a full explanation.)

Washington DC — The latest calculations show the minimum wage in the US today would be roughly $23 per hour if it had kept pace with productivity growth as it did for the first 30 years after a national minimum wage first came into existence in 1938, according to Dean Baker, co-founder of the Center for Economic and Policy Research.

As Baker explains in his blog, Beat the Press, “The $23 an hour [minimum wage] is useful as a thought experiment for envisioning what the world might look like today, but it would not be realistic as a policy for local, state, or even national minimum wage without many other changes to the economy. . .If the bottom half or 80 percent of the workforce got the same share they got 50 years ago we would have an enormous problem with inflation.”

Baker explains how our economy has been restructured “. . .in ways that ensure a disproportionate share of income goes to those at the top.” And there is no better visual of how our economy is restructured than by showing this graph of the disconnect between the minimum wage and productivity.


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