Monday, February 13, 2012

Inflation-Adjusted Minimum Wage vs. Unemployment

My interpretation of this chart is that significant increases in the federal minimum wage tend to cause spikes in unemployment, usually with a delay of up to three years.

Clinton's 2nd term is the only time period that shows a delay of more than a few years. I would attribute this delay of the inevitable to the bursting of the dot-com bubble (March 2000) and 9/11.

The only time period that doesn't fit my conclusion is the Kennedy administration and the early years of Johnson's Great Society.
The minimum wage went up 40% in the last two years of the Bush administration, and an additional 8 million people filed for unemployment over the next several years.

In 2009, Obama expressed interest in raising the wage to $9.50. By my estimates, this would have put another
5 to 6 million people in the unemployment lines.

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  1. Where did this graph come from

    1. i created it using publicly available data on the minimum wage rates in the 20th century

    2. This entry has data sources included