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Minimum Wage Would be $18.85 if Tied to Productivity

It's been seven years since the federal minimum wage has gone up. (U.S. Treasury Department)
It's been seven years since the federal minimum wage has gone up. (U.S. Treasury Department)
August 3, 2016

JEFFERSON CITY, Mo. - If the federal minimum wage had grown at the same pace as increases in worker productivity, it would be nearly $19 an hour in 2016, according to new analysis from the Economic Policy Institute.

This summer marks the seven-year anniversary of the last time the federal minimum wage was raised - from $6.55 to $7.25 an hour - and the buying power of those dollars has fallen by 10 percent because of inflation.

Until the 1960s, the minimum wage was raised at roughly the same pace as increases in worker productivity, said study author, David Cooper, senior economic analyst with the Economic Policy Institute.

"Had that trend continued since 1968 and we had continued to raise the minimum wage pretty regularly every year,” Cooper said, "we would have a minimum wage today of close to $19 an hour."

According to the National Federation of Independent Business, raising the federal wage isn't possible for all businesses, especially in the South and parts of the Midwest. Missouri's minimum wage is currently $7.65 an hour - 40 cents higher than the federal rate.

Cooper said raising the wage floor also helps middle-class workers get paid more, and has a positive impact on local economies.

"Low-wage workers tend to spend every single dollar that they receive, because they have to, just in order to make ends meet,” he said. "So if you raise the minimum wage, you're transferring income to folks who are going to go out and spend it right away. That can mean more customers coming through the door for most businesses."

The Democratic Party recently added a $15 per hour minimum wage to its platform, and Donald Trump has also said he is in favor of an increase.

Veronica Carter, Public News Service - MO