# Question: An article in the Sacramento Bee Stafford 2003 on July

An article in the Sacramento Bee (Stafford, 2003) on July 7, 2003, reported that the current minimum wage at that time was only \$ 5.15 an hour and that it had not kept pace with inflation. The Consumer Price Index at the time (the end of June, 2003) was 183.7.
a. One of the quotes in the article was βto keep pace with inflation since 1968, the minimum wage should be \$ 8.45 an hour today.β In 1968, the minimum wage was \$ 1.60 an hour, and the Consumer Price Index was 34.8. Explain how the author of the article deter-mined that the minimum wage should be \$ 8.45 an hour.
b. The minimum wage was initiated in October, 1938, at \$ 0.25 an hour. The Consumer Price Index in 1938 was 14.1, using the 1982β1984 base years. If the minimum wage had kept pace with inflation from its origination, what should it have been at the end of June, 2003? Compare your answer to the actual minimum wage of \$ 5.15 an hour in June, 2003.
c. The minimum wage of \$ 5.15 an hour quoted in the article was set in September, 1997, when the Consumer Price Index was 161.2. If it had kept pace with inflation, what should it have been at the end of June, 2003?
d. Based on your answers to parts (a) to (c), has the minimum wage always kept pace with inflation, never kept pace with inflation, or some combination?

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• CreatedOctober 22, 2015
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