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This is a study on minimum wage and poverty thresholds. I have included the procedure for one year, 2009, below. You will calculate all variables

This is a study on minimum wage and poverty thresholds.  I have included the procedure for one year, 2009, below.  You will calculate all variables for all years 1968 – 2013.  You will have three graphs.  Check the attached excel data sheet to see what info. you already have.  You will need to calculate a few variables for each year.  Use the excel data sheet to do quick and easy cut and paste formulas.  If you need help, or are hyperventilating now, just drop me a line or come by the office.     JB

Step 1. Start off by using the 2009 and 2010 data.  You have this data on the excel data sheet:

  1. Minimum wage/Nominal minimum wage (NMW)
  2. Consumer Price Index (CPI) Use CPI-U for Urban Consumer, annual average
  3. Poverty level income threshold for a household of 2 (H2)
  4. Poverty level income threshold for a household of 4 (H4)

(NMW, H2 and H4 are nominal variables)

  1. CPI in hundredths = CPI/100. Divide all nominal values by CPI in hundredths to convert nominal values to real values.

Step 2. Convert nominal minimum wage (NMW) to real minimum wage (RMW).  

Minimum wage (NMW) from data source in 2009 = $______, the CPI for 2009 = ______

Formula 1:  RMW= NMW/CPI in hundredths

                                _____________ for 2009

Step 3. Calculate yearly percent change in RMW (PP). % chg PP represents annual percent change in purchasing power.

Formula 2: % chg PP from 2009 to 2010:

= (RMW in 2010–RMW in 2009)/RMW in 2009) x 100, = _____________________; an       (increase or decrease) in purchasing power.

Step 4. Calculate the yearly percentage change in the CPI (INFLT). INFLT represents annual percent change in inflation.

Formula 3: INFLT from 2009 to 2010:

                      = (CPI2010 â€“ CPI2009/ CPI2009 x 100;       

                      = (CPIY2011 â€“ CPI2010)/ CPI2010 x 100;     

                        = __________________, an (increase or decrease) in inflation from 2009 to 2010

Step 5. Graph 1. For every year, graph % chg in PP and Inflation (INFLT) on the same graph. Title of graph should be Trend in Purchasing Power and Inflation for Selected Years    

Step 6. Calculate real annual income 1(INC1):  RMW x 40 hours per week x 50 weeks per year.

Formula 4:    INC1 for 2009 = ______________, H2 =________ , this is a nominal value

Formula 5:   Convert to real value (RH2) = h2/CPI (2009) in hundredths = _______________

YearNMWCPI-UH2H4CPI/100RMW% chg ppinflation rateINC1rh2INC1PCTRH2INC1PCTR4rh4INC2PCTRH2INC2PCTRH4

19681.634.822623553












19701.638.825253968












19721.641.827244275












19762.356.937115815












19792.972.647257412












19803.182.453638414












19813.3590.959179287












19883.35118.3770412092












19913.8136.2886513924












19924.25140.3913714335












19944.25148.2966115141












19964.25156.91023316036












19974.75160.51047316400












19985.151631063416660












20005.15172.21123917603












20015.15177.11156918104












20025.15179.91175618392












20035.151841201518810












20045.15188.91233419307












20055.15195.31275519971












20065.15201.61316720614












20075.15207.31354021203












20085.85215.31405122025












20096.55214.51399121954












20107.25218.11421822314












20117.25224.91465723021












20127.25229.61493723492












20137.252331515623836













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