NATION Study finds minimum wage drops by record percentage

Adjusted for inflation, the minimum wage is 10 percent below 30 years ago.
CBS MARKETWATCH
SAN FRANCISCO -- Americans earning the federal minimum wage have fallen behind U.S. median income by a record percentage this year, a study by the Economic Policy Institute found.
Today's $5.15-an-hour minimum wage amounts to only 38 percent of the national median income of $13.47 in the first half of 2003.
The shortfall is the largest since the data was first gathered in 1973. The wage gap was at its narrowest in 1979, when the minimum wage amounted to 55 percent of median income.
A tight labor market led to a rise in median income in the late 1990s, but the minimum wage has been unchanged for six years.
Since it isn't linked to inflation, workers in the lowest-paying jobs have fallen behind on meeting basic costs of living, said Sylvia Allegretto, an economist with the institute, a liberal economic research group.
"People making the minimum wage are actually losing ground," Allegretto said. "Inflation erodes in real terms the value of those monies over time."
In 1973, the minimum wage was $1.60 an hour -- equivalent to $5.75 today adjusting for inflation. Today's actual minimum wage of $5.15 is in real terms 10 percent lower than 30 years ago.
The national median income rose 10 percent in the same period, to today's $13.47 from 1973's inflation-adjusted $12.26.
Addressing the gap
Some states have addressed the wage gap. Washington state links its minimum wage to inflation, and its minimum will rise to a national high of $7.16 in January from $7.01. That will push the state past Alaska, which has a $7.15 minimum wage, according to the U.S. Labor Department.
Oregon's minimum wage is $6.90. Connecticut's is also, but it rises to $7.10 in January. California and Massachusetts pay a minimum wage of $6.75, while Maine, Vermont and Hawaii pay $6.25. Rhode Island, Delaware and the District of Columbia pay $6.15.
Meanwhile, cities and counties continue to adopt living-wage ordinances requiring employers holding contracts with government agencies to pay an hourly wage adequate for the area's living costs.
"The cost of living is really different across states. You can see how a federal minimum wage is probably not really efficient," Allegretto said. In costlier locales, "a minimum wage of $5.15 would be really insufficient and very low. In other places, maybe it's not that far off the mark."
The lack of an inflation-adjusted federal wage will lead to more living-wage mandates by local governments, she said. "It's a trend that's going to continue."