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Inflation's historic impact on minimum wage

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Posted at 11:28 AM, Aug 05, 2022

Charles Waddy works two jobs to make ends meet in Cheyenne, Wyoming.

In addition to working both jobs, inflation has forced Waddy to make difficult decisions. He got rid of his cell phone so he could save money.

“It’s just crazy how everything expanded up," he said, "rent, gas, especially food."

Waddy's jobs pay more than minimum wage. He's one of the lucky ones in Wyoming, which is one of 20 states that has not raised their minimum wage above the federal level of $7.25 an hour.

“It’s supposed to be designed to be a living wage and, right now, you can barely live on it," says Nick Colsch, an economist who teaches at Laramie County Community College.

He used to work a job that paid minimum wage.

"It’s heartbreaking. I think if you give up 40 hours a week, you should be able to live," Colsch said. "You should have the other 128 a week to yourself.

According to the Economic Policy Institute, rising inflation has brought down the value of minimum wage to its lowest point since the 1960s.

While the federal minimum wage has stayed at $7.25 for 13 years, inflation has gone up 38%. That means $7.25 in 2022 is considered close to the same as $4.50 in 2009.

“There should be no reason if prices are going to increase year over year, the very minimum standard we make people work for also doesn’t rise," Colsch said.

Democrats have proposed raising the federal hourly minimum wage to $15 an hour. President Joe Biden called for the raise in his State of the Union address.

In 2021, Republicans countered with a plan to raise the minimum wage to $10 an hour.

Groups, like small business owners, have raised concerns about rising wages potentially forcing them to cut staff.

Only about 1.5% of American workers actually earn $7.25 an hour jobs. A majority of states and dozens of cities have put their own minimum wage hikes in place. Private companies like Amazon and Target have also raised starting pay well above the minimum wage.

Colsch says the federal minimum wage number sets a baseline for what's considered good pay.

“There are a lot of people who are three bad months away from being homeless than there are three good months away from being a millionaire," Colsch claimed.

While Washington lawmakers debate which numbers and rates work best for the economy moving forward, across America there are people like Waddy who are working at least two jobs just to get by.

“I’m doing what I’m doing every day for my family," he said. "That's what is motivated and gets me going every morning."