My Two Cents on Minimum Wage
I remember progressing through high school and into college, working several minimum wage jobs to make my way. Although those jobs helped me in the short-term, I never dreamed I would actually spend my life earning minimum wage – I would complete college and enter my chosen career (education), where I would earn a “real” salary. I had no dreams of attempting to support myself on a minimum wage job, even by moving up the food chain.
This was my take back then, of course, and watching the recent Facebook debates, I began to doubt my opinion formed years ago while working at Wendy’s. In order to form a current opinion on this topic, I had to decide how to research this. Since I worked a minimum wage job back in the early 90’s, I figured I would start there. Let’s visit 1990, when I worked for minimum wage at a local fast food joint. I enjoyed opening, hated closing, and one evening a week, dressed as Wendy herself to entertain kids. I know there is a picture somewhere of that, but this is all beside the point. Let’s get to the numbers!
In 1990, the established minimum wage for the United States was $3.80. This is found at multiple sites, but I used the Dept of Labor (http://www.dol.gov/whd/minwage/chart.htm). Each state then sets its own minimum wage, but may not set it lower than the federal standard. I honestly do not remember exactly what my pay was back in 1990, but we know it wasn’t lower than $3.80 and as I progressed (completed more training and took on additional responsibilities), I know I earned a few cents per hour more pending positive evaluations.
My goal upon graduation from college was to start my career as a teacher. In 1990, the United State’s average starting salary for a teacher was $21,542. Again, most states, and really the districts in each state, set the starting salaries for their areas. Since we’re looking at the minimum wage for the US (not individual states), I chose the teacher starting salary for the whole United States as well. This info came from the National Center for Education Statistics (http://nces.ed.gov/programs/digest/d99/d99t080.asp).
Fast forward a bit to the year 2012. The federal government has set minimum wage at $7.25 (which was initially set at that rate in 2009) and no state is allowed to set a lower starting wage. The United States average for teacher starting salaries school year 2012/2013 is $36,141. This number came from the National Education Association (http://www.nea.org/home/2012-2013-average-starting-teacher-salary.html). Let’s crunch some numbers. Minimum wage increased from $3.80 to $7.25 between 1990 and 2012. This is an increase of 90.79%. Starting salaries for teachers increased from $21,542 in 1990 to $36,141 in 2012, an increase of 67.77%.
Another option I considered as I was leaving high school was joining the military. Surprised? Yeah, that’s a fun little fact most people don’t know about me. The military being a government agency, I found what I consider reliable records for all forms of military pay through the Defense Finance and Accounting Service (http://www.dfas.mil/militarymembers/payentitlements/militarypaytables.html). This was actually WAY more information than I wanted, but it was good data. I compared salaries from January 1990 to January 2012 for a few categories, each of them at the two years or less. I chose the two years or less because we’re consider minimum wage comparison here, not experienced wages. I selected the categories O-8, O-1 and E-1. Each category showed an increase over 100%, 103.88%, 103.89% and 105.94%, respectively.
OK, so what about other professions? I began searching for starting salaries for other careers – accounting, law enforcement, fire fighters, nursing, attorneys, physical therapists… While I could locate valid resources for current trends, getting reliable historical data from 1990 wasn’t as forthcoming. I tried the Department of Labor, the Census, Bureau of Labor Statistics, and a few career specific sites. Although I’m not completely sold on the validity of the sites I found, I thought I would use what little information I could. So, for kicks and giggles, let’s take a look at those numbers.
At www.postsecondary.org, I found a reference chart from 1995 with details about starting salaries for engineering, accounting, business administration, and liberal arts. You can find the chart here – http://www.postsecondary.org/last12/401095Salary.pdf. Using their information, I calculated their starting salaries for 1990 at $37,000, $31,750, $28,500, and $26,000, respectively.Now, moving to more recent times…
The field of engineering in 2012 was incredibly varied and salaries match this trend. In 1990, although this profession was just branching out, it wasn’t nearly as diverse as it is today. Digging deeper and narrowing the field down, I was able to find a reference showing engineers with less than one year experience earning $55,000. Compared to the 1990 data, this shows an increase of 48.65%. This data is from American Society of Mechanical Engineers, from this article – https://www.asme.org/career-education/articles/early-career-engineers/engineering-salaries-on-the-rise. While researching salaries for accounting, I found a reference to an average starting salary for engineers at $61,872. This figure would show a larger increase at 67.22%. In looking at overall increases for starting salaries, I’m more inclined to believe this number. That reference (which was used for the accounting & business administration reference as well) is found here – http://www.accountingweb.com/topic/education-careers/2011-accounting-graduates-earning-average-salaries-50000.
We have two numbers for comparison when considering accounting, those fresh out of college and those who specifically earned a degree in accounting. Exiting college in 2011, these graduates earned $41,701 and $50,500 respectively. Since I’m in a calculating mood, let’s figure both. Using the $31,750 from 1990, this shows an increase of 31.34% with any degree and an increase of 59.06% if you specialized in accounting.
Moving onto business administration, I expected much higher starting salaries than I found. Since AccountingWeb chose to also highlight starting salaries for business, I continued to use their numbers. They separated this field into business majors and business administration with starting salaries for college graduates at $48,144 and $43,600 respectively. Using our original average of $28,500, we find an increase of 68.93% and 53% for these categories. Keep in mind, the original reference (from 1990) cited specifically business administration (the 53% increase).
As AccountingWeb was targeting more business-related degrees, I had to move on to find current salary data about liberal arts. Knowing what little I do about this field, I expected dismal numbers. I was pleasantly surprised. An article from AOL Jobs (citing the National Association of Colleges and Employers) broke this category down into three segments – Liberal Arts & Sciences/General Study at $43,100; History at $41,900; and Literature/Letters at $40,200. Using the $26,000 figure from 1990, we find impressive increases at 65.77%, 61.15%, and 54.62$%. Not bad! The site I used for the 2012 data is here – http://jobs.aol.com/articles/2013/02/06/starting-salary-liberal-arts-grads/.
So let’s see what we have, shall we?
Going back to our data about minimum wage – we start at $3.80, progress to $7.25, and show an increase of 90.79%. Compared to other professions (with the exception of the military), minimum wage has increased significantly more than starting salaries for these degree careers.
Minimum wage increases at irregular intervals and at varying percentages. Using the reference above for minimum wage information, I calculated the increases over five-year intervals.
Since this is only looking at income, let’s take a look at cost of living. Some of the arguments I’ve read for increasing minimum wage are due to the rising costs of supporting a family. I found a fascinating chart comparing the years between 1990 and 2008 through www.census.gov. You may access it here – https://www.census.gov/compendia/statab/2011/tables/11s0683.pdf. Please keep in mind – these numbers are only from 1990 to 2008. The data for 2012 is not yet available, as it will likely be derived from the 2020 census. This means, based on the trends, all the percentages should climb slightly over the next four years, but predicting data with any real accuracy is sketchy.
Let’s sum up those findings on cost of living – Overall, the cost of eating seemed low to me, with an increase of only 50%. Housing showed a higher increase of 96.59%. Health care had one of the highest increases at 101.08%. And entertainment is also up there, showing an increase of 99.37%. While each area is certainly different (apparently the cost of reading has actually declined), combining ALL areas, the cost of living has increased by 77.89%.
So, my take on all of this?
Overall, I found it was very difficult to compare apples to apples. Many reference sites I did find used average salaries, not starting salaries. I attempted to maintain some form of consistency by using starting salaries, which were very difficult to locate, especially for 1990. I felt the data about more current years was much more reliable. I would have liked to research more professions, but the amount of hours just to compile this information was well more than I typically spend for a blog post.
Back in 1990, I knew a minimum wage job would mostly support me, independently, if I chose to live a very meager lifestyle. I knew it would not support me and a family and I knew I wanted a stronger, higher income. I chose to complete college and my current salary is significantly higher than minimum wage, as I have 18 years successful experience in my field.
Reviewing the information I was able to piece together, I hold by my original beliefs. A minimum wage job is not intended to support a family. It wasn’t enough in 1990 and it’s not enough now. But minimum wage has increased in the last 24 years and at a rate higher than the professions I researched, with military being the only exception. In addition, the cost of living has increased by 77.89%, less than the increase of minimum wage and more than the increase of starting salaries of other careers.
I have read where many are pushing for an increase to $15.00 per hour for minimum wage (an increase of 106.9%). Based on the cost of living trend, a comparison of starting salaries from other professions, and the recent history of minimum wage, I do not see any justification for such an extreme increase.