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One week from today, on July 24, 2009, the federal minimum wage will be raised another $.70 an hour; representing the final step of 3 increases passed by Congress a few years ago. The new minimum wage will be $7.25 per hour; up from $6.55. On July 24, 2008, it went from $5.85 to $6.55 and, a year before that, it went from $5.15 to $5.85. Unfortunately, it had been at $5.15 per hour from September of 1997 to July of 2007 with no change (while inflation climbed steadily at an average of about 2.5% per year).

Notwithstanding the bad timing of this final increase which will add yet more pressure and turmoil to the failing U.S. economy, it should understood that this increase is really "too little, too late".

Consider the following:

Although the minimum wage in 1968 (over 50 years ago) was $1.60 (nominal value), its real value (when adjusted for inflation using 2007 real values) was the highest in history at almost $9.50. The current increase in the minimum wage to $7.25 will have a real value, again in 2007 real values, of $7.00.

Simply put, you were much better off working for $1.60 an hour in 1968 than you are working today for $7.25 an hour.

If you don't believe it, talk to the baby-boomers.

- Ed Smith, Publisher
The EHS Letter Manual