Federal minimum wage of $26 per hour proposed by top economist

A federal minimum wage of $26 per hour was discussed by Dean Baker, Senior Economist at the Center for Economic and Policy Research in a recent blog post. The argument for a $26 federal minimum wage relies on the ascertain that this would be the proper amount had the minimum wage progressed with with productivity growth over the past several decades.

The federal minimum wage did, in fact, keep pace with productivity growth for over 30 years after a national minimum wage first came into existence in 1938. But then, in the the 1970’s that trend changed and the disparity between the federal minimum wage and productivity growth has continued to widen. This gap increase is shown clearly in the chart below.

Trends in the Federal Minimum Wage vs. Productivity Growth

Not only has the federal minimum wage not kept pace with productivity growth, hasn’t kept pace with inflation. An American citizen working at the minimum wage in 2021 is getting substantial lower pay than a worker did over 50 years ago in 1968.

Currently, affordable rent and home ownership are our of reach for minimum wage workers in the United States.




Baker argues that the $26 an hour minimum wage is, “useful as a thought experiment for envisioning what the world might look like today, but it would not be realistic as policy for local, state, or even national minimum wage without many other changes to the economy. A minimum wage this high would almost certainly lead to large-scale unemployment, and that would be true even if it were phased in over five or six years.

$26 Federal Minimum Wage would be a game changer

While a $26 federal minimum wage would certainly be a difference maker for hundreds of thousands Americans, even Baker concedes it would be difficult to bring to fruition.

In conclusion Baker summarizes, “We have to make many other changes in the economy to make this possible. These changes are well worth making.”