The federal minimum wage has been $7.25 per hour since July 2009—over 16 years without a single increase. But the erosion started much earlier. The minimum wage peaked in purchasing power in 1968 at $1.60, which equals about $14.35 in today’s dollars. Here’s the complete picture.
The History of Minimum Wage
Year
Minimum Wage
In 2026 Dollars
1938
$0.25
$5.40
1945
$0.40
$6.80
1950
$0.75
$9.50
1956
$1.00
$11.20
1961
$1.15
$11.70
1963
$1.25
$12.40
1968
$1.60
$14.35 (Peak)
1974
$2.00
$12.60
1978
$2.65
$12.45
1981
$3.35
$11.30
1990
$3.80
$8.90
1997
$5.15
$9.85
2007
$5.85
$8.65
2009
$7.25
$10.35
2026
$7.25
$7.25
Key finding: The 1968 minimum wage had nearly double the purchasing power of today’s $7.25.
Minimum Wage Purchasing Power
What $1.60/Hour Bought in 1968 vs $7.25 Today
Item
1968 Worker Hours
2026 Worker Hours
Gallon of gas
0.2 hours
0.5 hours
Dozen eggs
0.3 hours
0.6 hours
Gallon of milk
0.6 hours
0.7 hours
Movie ticket
0.8 hours
2.1 hours
Monthly rent (average)
55 hours
235 hours
New car
1,875 hours
6,620 hours
Year of college
245 hours
1,517 hours
Median home price
8,750 hours
57,930 hours
The cruelest stat: In 1968, a minimum wage worker could buy the median home with 8,750 hours of work (4.4 years full-time). Today: 57,930 hours (29+ years full-time).
Annual Minimum Wage Income
Year
Hourly Wage
Annual (2,080 hrs)
In 2026 Dollars
1968
$1.60
$3,328
$29,850
1978
$2.65
$5,512
$25,900
1990
$3.80
$7,904
$18,510
2000
$5.15
$10,712
$19,050
2009
$7.25
$15,080
$21,520
2026
$7.25
$15,080
$15,080
The collapse: 1968 minimum wage provided $29,850 in today’s dollars. 2026 minimum wage provides $15,080. That’s a 50% decline in standard of living.
Minimum Wage vs Key Costs
Housing
Year
Min Wage (Monthly, Full-Time)
Average Monthly Rent
Rent as % of Min Wage
1968
$277
$100
36%
1978
$459
$200
44%
1990
$658
$450
68%
2000
$893
$600
67%
2010
$1,257
$900
72%
2020
$1,257
$1,100
88%
2026
$1,257
$1,700
135%
Translation: A full-time minimum wage worker in 1968 spent 36% of income on average rent. Today: 135% of minimum wage income is required for average rent. It’s mathematically impossible.
Fair Market Rent Hours
State
Fair Market Rent (2BR)
Hours at Minimum Wage
Hours/Week for 50% of Income
Hawaii
$2,200
303/month
70/week
California
$2,100
290/month
67/week
New York
$1,900
262/month
60/week
Texas
$1,200
166/month
38/week
Georgia
$1,250
172/month
40/week
Ohio
$950
131/month
30/week
Note: These assume the federal minimum. Many of these states have higher state minimums.
College Tuition
Year
Annual Public Tuition
Hours at Minimum Wage
Can Work Pay for College?
1968
$329
206 hours
Yes—summer job
1978
$688
260 hours
Yes—summer job
1990
$1,908
502 hours
Barely—part-time work
2000
$3,501
680 hours
Difficult
2010
$7,605
1,049 hours
Impossible
2026
$11,000
1,517 hours
Laughable
The shift: College went from 206 hours of work (5 weeks full-time) to 1,517 hours (38 weeks full-time). You literally cannot work enough hours while studying full-time.
If Minimum Wage Had Tracked…
Different Metrics
Tracking Method
2026 Minimum Wage Would Be
Actual
$7.25
CPI inflation
$14.35
Housing inflation
$22.00
Healthcare inflation
$31.00
Productivity growth
$24.00
CEO pay growth
$48.00
The Productivity Gap
Period
Productivity Growth
Minimum Wage Growth
1938-1968
107%
540% (kept pace)
1968-2000
82%
222% (lagged)
2000-2026
46%
41% (collapsed)
What happened: From 1938-1968, minimum wage grew with productivity. After 1968, the connection severed. Workers produced more and got paid less relative to that production.
State Minimum Wages (2026)
States Above Federal
State
Minimum Wage
Notes
Washington
$16.66
Indexed to inflation
California
$16.50
Annual increases
New York
$16.00
Higher in NYC
Massachusetts
$15.00
Connecticut
$15.69
New Jersey
$15.49
Maryland
$15.00
Illinois
$14.00
Colorado
$14.42
Arizona
$14.35
Florida
$13.00
Rising to $15
Oregon
$14.70
Higher in Portland
States at Federal ($7.25)
States
Notes
Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Wisconsin, Wyoming
No state minimum or federal minimum applies
The patchwork: A worker in Washington earns $16.66/hour. A worker doing the same job across the border in Idaho earns $7.25. Same work, 130% pay difference.
Living on Minimum Wage: The Math
Monthly Budget at $7.25 (Federal Minimum)
Income/Expense
Amount
Gross monthly income
$1,257
Federal taxes
-$50
State taxes
-$30
Social Security/Medicare
-$96
Take-home pay
$1,081
Essential Costs
Low Estimate
Rent (with roommates)
$600
Utilities (split)
$100
Food
$250
Transportation (bus/gas)
$150
Phone
$45
Total minimum expenses
$1,145
Monthly deficit: -$64. This is with roommates, no car payment, bare minimum food, and no healthcare, clothing, emergencies, or anything else.
Monthly Budget at $15.00 (Higher State)
Income/Expense
Amount
Gross monthly income
$2,600
Federal taxes
-$210
State taxes
-$100
Social Security/Medicare
-$199
Take-home pay
$2,091
Expenses
Amount
Rent (modest 1BR)
$1,200
Utilities
$150
Food
$300
Transportation
$200
Phone
$50
Healthcare (subsidized)
$100
Total
$2,000
Monthly surplus: $91. Barely survivable. No savings, no emergencies, no unexpected expenses.
The Research on Minimum Wage
Arguments Against Raising
Claim
Evidence
“Kills jobs”
Studies show minimal employment effects at moderate increases
“Hurts small business”
Workers spend more, boosting local economy
“Causes inflation”
Prices increase 0.4% for every 10% wage increase
“Teens don’t need more”
Half of minimum wage workers are 25+
Arguments For Raising
Factor
Data
Reduces poverty
Lifts millions above poverty line
Reduces turnover
Lower hiring/training costs
Increases spending
Low-wage workers spend locally
Reduces government assistance
Fewer workers need SNAP, Medicaid
Study Results
Study/Source
Key Finding
Card & Krueger (NJ/PA)
No job losses from increases
UC Berkeley (multiple)
Minimal employment effects
CBO (2019)
Some job loss, many lifted from poverty
Seattle $15 Study
Hours reduced slightly, wages up significantly
Historical Context
Why 1968 Was the Peak
Factor
Impact
Strong unions
35% of workers unionized
Manufacturing economy
High-paying jobs accessible
Immigration low
Labor markets tight
Post-war prosperity
Companies could afford wages
Political will
Both parties supported increases
Why It Collapsed
Factor
Started
Union decline
1970s
Immigration increase
1980s
Manufacturing loss
1980s-2000s
Filibuster abuse
1990s
Lobbying influence
1990s-2000s
Regional polarization
2000s
What Workers Can Do
Individual Strategies
Action
Potential
Move to higher-minimum state
+$7-9/hour immediately
Get certifications
Many $15-20/hour jobs need them
Negotiate even at low wages
Some flexibility exists
Work in tipped positions
Can exceed minimum significantly
Remote work for coastal companies
Geographic arbitrage
Collective Actions
Action
Impact
Support ballot measures
Many states passed increases by vote
Union organizing
Collective bargaining raises wages
Public advocacy
Shifts political conversation
Vote in primaries
Where minimum wage policy is determined
The Full-Time Myth
Actually Working 40 Hours
Reality
Impact
Unpredictable scheduling
Hours vary wildly week to week
Multiple part-time jobs
No benefits at any of them
Transportation between jobs
Unpaid time, gas costs
No sick leave
Illness means no pay
No vacation
No paid time off
Real Annual Hours
Worker Type
Actual Annual Hours
Actual Annual Income
Full-time (ideal)
2,080
$15,080
Full-time (realistic)
1,800
$13,050
Part-time with scheduling
1,200
$8,700
Multiple jobs, variable
1,500
$10,875
Frequently Asked Questions
Why don’t minimum wage workers just get better jobs?
Many do—minimum wage positions have massive turnover. But the job market is a pyramid. For everyone who “moves up,” someone fills that minimum wage position. The argument “just get a better job” only works individually, not systemically.
If we raise minimum wage, won’t prices just increase?
Studies show prices increase about 0.4% for every 10% minimum wage increase. A doubling of minimum wage might increase prices 4%. Workers would still be massively better off—their income doubled while prices rose 4%.
Don’t most minimum wage workers live with parents or are teenagers?
No. The median age of minimum wage workers is 30. Half have some college education. About 25% are parents. The “teenager living at home” narrative doesn’t match reality.
Why not let the market set wages?
The market IS setting wages—at exploitative levels because desperate workers will accept anything. Minimum wage exists because pure market wages in eras without them (1890s-1930s) produced child labor, 80-hour weeks, and destitution wages.
The federal minimum wage of $7.25 is a policy failure by any measure. It was worth more in 1968 than today. It doesn’t cover rent anywhere in America. It requires full-time workers to rely on government assistance. Whether you believe minimum wage increases are good policy or not, the current $7.25 is economically indefensible—a number frozen in 2009 while every single cost of living continued to rise.
WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.
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