Question: The minimum wage. The federal government sets the minimum hourly wage that employers can pay a worker. Labor wants a high minimum wage, but many economists argue that too high a minimum makes employers reluctant to hire workers with low skills and so increases unemployment. Here is information on changes in the federal minimum wage, in dollars per hour:
Year 1960 1965 1970 1975 1980 1985 1990 1995 2005 2007
Min. wage ($) 1.00 1.25 1.60 2.10 3.10 3.35 3.80 4.25 5.15 5.85
Use annual average CPIs from Table 16.1 to restate the minimum wage in constant 1960 dollars. Make two line graphs on the same axes, one showing the actual minimum wage during these years and the other showing the minimum wage in constant dollars. Explain carefully to someone who knows no statistics what your graphs show about the history of the minimum wage.