NC Budget and Tax Center

Prosperity Watch: An eroding minimum wage

Last week voters in four states–Arkansas, Alaska, Nebraska and South Dakota–approved minimum wage increases that will address in part the eroding value of their state’s minimum wage for workers earning at the lowest end of the wage distribution.  As of January 1st, at least 25 states will have minimum wages higher than the federal level of $7.25.

It turns out voters and state policymakers recognize that the wage floor must have some connection to what workers need to make ends meet and what wage conditions are in the labor market overall.

At Prosperity Watch this week, the Budget & Tax Center looked at the minimum wage to median wage ratio in North Carolina over time.  This ratio signals the strength of a minimum wage relative to local labor market conditions.  The lower the ratio, the fewer goods and services a worker can purchase for every additional hour worked. North Carolina’s minimum wage to median wage ratio fell from 64.4 percent in 1979 to 41.2 percent in 2013.  Find out more at Prosperity Watch here.

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