Auto Workers and the Minimum Wage

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Tuesday, 02 July 2013 04:58

The Washington Post had a piece noting the rapid growth of automobile production in Mexico that raised the possibility that it would come at the expense of production in the United States. The piece points out that the auto companies now hire new workers in the United States at wages between $14 and $18 an hour.

It is worth noting that if the minimum wage had kept pace with productivity growth over the last 45 years it would be almost $17.00 an hour today. This means that newly hired workers would in many cases be working for less than a productivity indexed minimum wage. The minimum wage had largely tracked productivity growth in the three decades from 1938 to 1968. (The unemployment rate in the last 1960s was less than 4.0 percent.)