Sunday, August 10, 2008

4% direct inflation by doubling the minimum wage to 15/hr

Jumping to a federal minimum wage from $7.25/hr to $15/hr would add less than 4% direct inflation.

$3.87/hr (average raise) X 2000 hours (full work year) = $7740 annual raise for 70 million workers (half the workforce -- $15/hr is the median wage) = $541.8 billion.  I'll ignore 3.5 million at the minimum wage (getting a full raise) to keep the eighth-grade math simple.  Divide 2012 GDP of $15.8 trillion by $541.8 billion and we get 3.4%. 

"Since 1973, productivity has grown roughly 80 percent while median hourly compensation improved by roughly 11 percent." 

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