Suppose the minimum wage was $0.25 per hour in 1938 and the CPI in that year was 11.5

If the CPI in 1990 was 130.7, what is the real value of the 1938 minimum wage in terms of 1990 dollars? The real value of the 1990 minimum wage in terms of 1990 dollars is $4.25. Has the real value of the minimum wage declined since 1938?


W(1938 ) = 130.7($0.25 )/11.5 = $2.84 , so the real value of the minimum wage has increased from 1938 to 1990.

Economics

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