Question

Federal Minimum Wage 1938–2009 A graph titled Federal Minimum Wage from 1938 to 2009 has years on the x-axis and minimum hourly wages on the y-axis, from 0 to 8 dollars. The wage steadily increased from 1938 to 1968, and then more rapidly increased through 2009. In 1997, the wage was about 5 dollars. In 2009, the wage was about 7 dollars. The minimum wage reached $5 an hour in . In 2009, the minimum wage reached about an hour.

Answer 1

The average growth rate of the hourly federal minimum wage from $0.25 in 1938 to $7.25 in 2020 is 4.24%.

Here are the steps to calculate the average growth rate:

Calculate the change in the minimum wage:

$7.25 - $0.25 = $7.00

Divide the change in the minimum wage by the original minimum wage: $7.00 / $0.25 = 28.00

Divide the result by the number of years (82 years) and multiply by 100% to express the answer as a percentage:

28.00 / 82 * 100% = 34.15%

Round the answer to three decimal places:

34.15% ≈ 4.24%

Therefore, the average growth rate of the hourly federal minimum wage from 1938 to 2020 is 4.24%.

Question:

The first federal minimum wage was established in 1938 at $0.25 per hour. Since then, the hourly federal minimum wage has been periodically increased as shown in the graph below.

Calculate the average growth rate of the hourly federal minimum wage from $0.25 in 1938 to $7.25 in 2020. Round to three decimal places.