Question

In 1968, the federal minimum wage was $1.60 per hour. This might seem to be a small amount. However, when adjusted for inflation it had the same purchasing power as$7.92 per hour in 2000 dollars. In 2000, the federal minimum wage was $5.15 per hour. Therefore, the real (adjusted for inflation) value of the minimum wage fell by about 35 percent between 1968 and 2000. Why do you think the federal government did not increase the minimum wage at the same rate as inflation? How might this have affected the number of minimum-wage jobs offered to workers?

Answer 1

The federal government did not increase the minimum wage at the same rate as inflation due to concerns about potential negative effects and the belief in market forces. This lack of adjustment could have resulted in a decrease in the number of minimum-wage jobs offered to workers.

Step-by-step explanation:

The federal government did not increase the minimum wage at the same rate as inflation for various reasons. One reason is that policymakers may have been concerned about the potential negative effects of raising the minimum wage, such as increased unemployment and reduced profitability for businesses.

They may have also believed that market forces, such as supply and demand, would be enough to determine wages.

This lack of adjustment for inflation could have affected the number of minimum-wage jobs offered to workers. Since the real value of the minimum wage decreased over time, it may have made it less attractive for employers to hire workers at that wage. This could have led to a decrease in the number of minimum-wage jobs available.

In summary, the federal government did not increase the minimum wage at the same rate as inflation due to concerns about potential negative effects and the belief in market forces. This lack of adjustment could have resulted in a decrease in the number of minimum-wage jobs offered to workers.