The Price of Honest Wages

A press release just in from Stocklytics.com reports that the current federal minimum wage of $7.25 an hour has fetched up with the lowest purchasing power of any minimum wage since 1945. It quotes its analyst, Edith Reads, as remarking that the “value of the minimum wage in America has diminished due to congressional inaction.” She decries the “lack of legislative measures to adjust the wage floor in line with inflation and changing economic realities.”The Sun is against the concept of a minimum wage. It’s a violation of the right of Americans to sell their labor at what they deem to be the best price. We are a creature of the Lochner Era. Be that as it may, Stocklytics notes that the minimum wage was last raised 15 years ago, in 2009, making it “the longest period without an increase in the federal minimum wage.” At least, we would add, since the federal minimum wage itself was imposed on employers in 1938.The trouble, as Stocklytics sees it, is the “failure” of the minimum wage “to keep pace with inflation.” The stock analysis app contends that the “real value” of the minimum wage in 1971, when it stood at $1.60, was worth, in today’s inflated dollars, $12.61. So today’s minimum wage is worth some 40 percent less than it was during the Nixon Era, Stocklytics says, and this “has widened the gap between the cost of living and the earnings of millions of Americans.”Stocklytics raises an important point about how the debasement of the dollar has harmed working Americans. Stocklytics, too, aptly notes that “Congressional inaction” is to blame. What Stocklytics overlooks, though, is the role the Congress played — or failed to play — in protecting the value of the dollar. After all, it is solely to the Congress that the Constitution assigns the monetary powers of the federal government.Yet Congress has surrendered much of that power, especially to the Federal Reserve. Worse, in 1971, the year that Stocklytics cites as a high point for the “real value” of the minimum wage, Congress acquiesced when President Nixon severed the last tie between the American dollar and its historical basis of value, gold. He did that by breaching America’s promise under Bretton Woods to redeem dollars to foreign governments at a 35th of an ounce of gold.Since then, the dollar has plummeted in value to less than a 2,300th of an ounce of gold. The Biden dollar is the weakest in history. No wonder that Stocklytics traces a decline in the earnings of Americans. Measured in gold, the dollar has lost some 98 percent of its value since 1971. Back then the minimum wage of $1.60 an hour was exchangeable for .043 ounces of gold. That amount of gold today would correlate to a minimum wage of $99 an hour.In 1971, an eight-hour work day at a minimum wage job would fetch a little more than a third of an ounce of gold. That day rate today would be worth just under $800. The gold value of that minimum-wage full-time salary would, in today’s inflated fiat dollars, be more than $200,000 a year. In other words, it’s not the “value of the minimum wage” that’s “diminished,” as Stocklytics suggests — it’s the value of the Biden-era dollar.Stocklytics laments the “disparity” between higher living expenses and an inflated dollar, noting that “a dozen states, cities, and the District of Columbia” have raised “their minimum wages to $15 per hour.” Stocklytics says it would be “a great win for over 30 million” working Americans to raise the federal minimum wage to that level. We don’t see it. Far better to restore honest money to keep inflation in check and maintain the value of honest wages.

The Price of Honest Wages

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