“Back when I was a kid, a minimum-wage job could support a family of three. Today, a full-time minimum-wage job in America won’t keep a mama and a baby out of poverty.”
-Senator Elizabeth Warren (D-MA)
During the 1960s, the minimum wage was increased several times and extended to the retail and service industries. Prior to the 1960s, the minimum wage was low and had limited coverage. Its effects were modest. Mainly, it favored northern at the expense of southern manufacturing. Again, prior to the 1960s, the minimum wage had little systematic effect on teenage or minority employment and, in fact, prior to the enactment of fair labor laws at the state and then the federal level, black unemployment was similar to white unemployment.
With the increases in the minimum wage and the extension of coverage to the retail and service industries during the 1960s, in addition to fair employment laws, things changed dramatically. Those who were employed enjoyed higher wages while teenage unemployment rose dramatically. To be sure, many other things were happening at about the same time. A short list would include the liberalization of welfare, the war in Viet Nam, urban riots and other violence, the sexual revolution, and widespread experimentation with psychedelic drugs.
Following the 1970s, there was some deterioration in the minimum wage due to inflation out-pacing subsequent hikes. At the same time, the cost of hiring full-time workers increased tremendously due to increases in employer-paid taxes and mandated benefits. Today, in addition to the problems of high unemployment and low labor force participation among teenagers, there is the problem of underemployment among low-wage workers.
As to how much deterioration has occurred in the minimum wage, in dollars of today’s purchasing power, it has fallen from about $8.50 to $7.15. This fall is not large enough to support Senator Warren’s argument that a full-time minimum wage worker could support a family of three back in the 1960s, but can’t support a family of two nowadays. Besides, the problem isn’t what a single mother with children can earn if she worked full-time. The problems are, #1, we have way too many children living in households with only one parents, and, #2, getting a full-time job with benefits and pay increases in the first place.
A restoration of the two-parent family among the lower classes, reform of income and health security programs, shifting some high schools from college prep schools to vocational schools, and some further tweaking of the tax code could restore the “happy days” of the 1950s, except this time, with equal opportunity for all Americans.
Clifford F. Thies is the Eldon R. Lindsay Professor of Economics and Finance at Shenandoah University. He received his Ph.D. in economics from Boston College.
