Activity 10
US Minimum Wage
1. Open the file MinWage.xls, which contains the minimum wage rate for the US starting
in 1938 when it was instituted. An excellent source of information on the minimum wage
in the United States is Department of Labor's page on the topic. (Please note that many
states also have minimum wage laws. In cases where an employee is subject to both
the state and federal minimum wage laws, the employee is entitled to the higher of the
two minimum wages. The current minimum wage rate in Illinois is $8.00. Illinois'
minimum wage will increase by an additional 25 cents on July 1, 2010 to $8.25 . )
(a) Make a graph of this data and paste it into your Word document. You will find it
easier if you choose an XY Scatter plot for this graph. Make sure you title the chart.
Give the x and y axes appropriate labels.
U.S. Minimum Wage, 1938-2009,
Current Values
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
1930
1940
1950
1960
1970
1980
1990
(b) In a short paragraph, describe the graph.
2000
2010
2020
(c) Can you make connections between which political parties and presidents were in
power at various times and the patterns in the graph? Click here for the list of U.S.
presidents. Does the data confirm or contradict the popular perception of the
Republican and Democratic parties that the Republicans are more favorable to the
business and wealthy classes while the Democrats support the interests of working
classes?
19381952
19531960
19611968
19691976
19771980
19811992
19932000
20012008
Start
End
%
%
Increase Increase inc/year
Dem
$ 0.25
$ 0.75
$ 0.50
200%
13%
GOP
$ 0.75
$ 1.00
$ 0.25
33%
4%
Dem
$ 1.00
$ 1.60
$ 0.60
60%
8%
GOP
$ 1.60
$ 2.30
$ 0.70
44%
5%
Dem
$ 2.30
$ 3.10
$ 0.80
35%
9%
GOP
$ 3.35
$ 4.25
$ 0.90
27%
2%
Dem
$ 4.25
$ 5.15
$ 0.90
21%
3%
GOP
$ 5.15
$ 6.55
$ 1.40
27%
3%
(d) Is the graph you made in (a) an accurate portrayal of how well off workers were who
earned the minimum wage? Explain why or why not.
No. It does not take into account the changing value of money due to inflation.
(e) We want to make a graph of the minimum wage rate in constant 2008 dollars. Open
the file CPI.xls, a file that contains the consumer price index (CPI-U base year 198284) from 1913 to the present. Paste the CPI values from 1938 to 2008 in the column
next to the minimum wage column in MinWage.xls. Using the ideas discussed in class,
add a column which contains the minimum wage in constant 2008 dollars. Make a new
graph of the minimum wage in constant 2008 dollars (XY Scatter works best; remember
you can select nonadjacent columns by holding down the Control key while you are
selecting.) Paste your graph into your Word document.
U.S, Minimun Wage, 1938-2008,
Constant (2008) Dollars
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
(f) In a well written paragraph, describe the overall features of the graph. As part of your
answer make sure you describe the overall shape (disregarding the annual
choppiness), the maximum, and the minimum.
(g) If you were earning the minimum wage, what year do you wish you were living in?
Why? 1968. My earnings then would have been worth $9.00 in today’s dollars.
(h) Look at years in your first graph when the actual minimum wage rate did not change
(E.g. 1950-1955, 1981-89). Then look at the second graph and describe what happened
to the minimum wage rate in constant dollars during those years. Explain why this
pattern occurs.
(i) In a short well written paragraph, contrast the different views that the two graphs give
of the minimum wage over time. How helpful is the first graph in understanding the
minimum wage over time?
(j) The graph below was widely distributed in September of 1997 when a minimum wage
hike was instituted. While it is very attractive, the graph contains a serious error. Find
the error and describe it. What impression does this graph give? How does the
impression differ from the impression made by your first graph? How does it differ from
the impression made by your second?
The gaps between the points on the x-axis have the same distance but represent
very different amounts of time passage, which gives the picture a distorted,
misleading impression of smooth and consistent upward trend in minimum wage.
(k) This data seems to be difficult for the media to handle. Time Magazine on Nov. 29,
1999 published a graph of the very same data. It is also incorrect, although the error is
not as grievous as the AP graph above. Find the error in the graph and describe it in
your Word document. (Hint. It has to do with the constant dollars graph.)
The problem is that the chart does not show the value of the minimum wage
decreasing between legislated increases in nominal minimum wage.