In the USA, middle class wages have been essentially stagnant for at least two decades, with diminishing benefits, but there is more to the story.

When less is more: Even as wages rise, earning power drops

By Paul J. Nyden
Charleston Gazette

When people think about their wages, annual salaries and expenses it's not always easy to compare current costs to past costs and figure out just what has changed financially.

The minimum wage, created in 1938, has gone up over the years. But if wage increases are calculated using inflation rates, those increases are often quite small or even non-existent.

"Wages are certainly one indicator of how people are doing. "But inflation is something that also should be taken into account when you are trying to understand the context of those wages and how they relate to the costs of living - the costs of things like shelter, food and retail goods," said Jennifer Shand, director of Marshall University's Center for Business and Economic Research.

"Changes in price levels and in what things cost have an impact on wages. That will determine whether folks are doing better than average or not."

Legislation creating the federal minimum wage was passed in 1938, during the New Deal under President Franklin D. Roosevelt.

The federal minimum wage started off at 25 cents an hour in 1938 and reached $7.25 an hour last year. But when increased costs of living are included in the calculation, and minimum wages are adjusted for inflation, the hourly wage in 2013 s would have been $4.13 in 1938, compared to $7.25 an hour in 2013.

For every year between 1956 and 1984, the value of the annual minimum wage -- adjusted for changes in the cost of living -- was higher than today's minimum wage.

Read the rest When less is more: Even as wages rise, earning power drops By Paul J. Nyden for the Charleston Gazette

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