The advocates of raising the minimum wage say that raising the minimum wage will give low income people a “living wage” and therefore a better standard of living. Maybe that’s true for a very short period of time but History shows us that in the long run, that theory has been proven to be false. Less than fifty years ago between 1970 and 1979 we doubled the minimum wage which in my opinion was the main cause of the REAL GREAT RECESSION since the Great Depression. During that Recession we not only had double digit unemployment which reached a high of 10.8%, but to add to the misery we had a double digit yearly inflation rate at the same time. And that Recession lasted longer than the 2008 Recession. The 2008 Recession was inaccurately named the Great Recession by former President Obama. Since the minimum wage is a base wage, when raised, most people’s pay is adjusted upwards in dollar amounts but the resulting inflation takes away any standard of living increase because no more products or services are being produced. In fact, after a minimum wage increase the poor and middle class are able to buy less because they are pushed into higher tax brackets resulting in a reduction in their standard of living because the government is forcibly taking a bigger percentage of their income. The government grows while the average person loses in percentage of take-home pay. In summing it up, if you are more productive and you get a raise and no one else does, then you get a real standard of living increase. But, if everyone gets a raise, no one gets a standard of living increase and the poorest among us will actually have a standard of living decrease by paying a larger percentage of their income in taxes.
In 2006, the Democrats took control of Congress and raised the minimum wage in both 2007 and 2008 by a total of over 27%, which in my opinion helped push us into the so-called Great Recession. Since 1940 the minimum wage has been raised from 30 cents an hour by over 2,400% to $7.25 an hour so ALL workers can “make a living wage.” Yet, the poverty rate remains about the same. Look at the Historical Minimum Wage and Inflation Charts and you will see that Inflation follows the minimum wage increases almost perfectly, especially since 1954.