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August 07, 2001
Minimum Wage? What Minimum Wage?
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When a Taco Bell restaurant advertises jobs that pay up to $9 an hour, or a Phillips 66 service station touts a hiring bonus of $500 for full-time workers who stay a year, all in a supposedly sluggish economy, it's enough to make you wonder just what happened to the minimum wage.

Nothing has happened to it. The federal minimum wage of $5.15 an hour is still on the books, and about 9 percent of American workers earn it.

But the minimum wage seems less relevant than it once was, especially in areas where labor is tight, the Arizona Republic reports.

"For us, the minimum wage hasn't been relevant for 20 years," said Carl Van Fleet, vice president of operations at In-N-Out Burger, which pays a starting wage of $9.25 an hour at its restaurants in a select few cities.

The minimum wage historically has been a divisive issue, the Republic notes. Proponents say high minimums are needed to help less-skilled workers, especially women and minorities, make ends meet. Opponents claim wage increases stifle businesses and cause layoffs.

That rhetoric has died down, however. Congressional legislation that would have raised the threshold by a buck an hour fizzled last year with little debate.

The wage started at 25 cents an hour in 1938 and increased throughout the 1960s and 1970s. It rose faster than inflation for a while, but its purchasing power has gradually eroded since peaking in 1968.

One possible reason for the federal wage's drop from the radar screen is that 10 states, mostly in the far West and New England, have raised their minimum wages. Workers in California earn at least $6.25 an hour and will make $6.75 next year.

Other reasons:

  • The reduced stature of labor unions also factors into the equation. About 95 percent of minimum-wage earners don't belong to unions.

  • Inflation cooled over the past two decades, making minimum-wage increases harder to justify.

  • Market forces seem to be working in places and industries where jobs are plentiful, forcing employers to pay more to attract help. Even most part-time teen workers earn above the minimum wage, according to the Department of Labor.

To view the Arizona Republic story, click here.

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