American Institute of Certified Planners (AICP) Practice Exam

How does the current minimum wage compare to that of 50 years ago when adjusted for today's economy?

1. Higher

2. Lower

3. About the same

4. No comparison can be made.

The correct answer is: Lower

The assertion that the current minimum wage is lower than it was 50 years ago, when adjusted for today's economy, is rooted in an understanding of inflation and wage value over time. Although the nominal value of the minimum wage may have increased in dollars, inflation significantly impacts its purchasing power. Over the past five decades, the cost of living has risen, which causes today's minimum wage to buy less in terms of goods and services compared to the minimum wage from 50 years ago. To illustrate this point, consider that historical minimum wage levels, when adjusted for inflation, reflect a higher purchasing power than the current federal minimum wage. Economic analyses often use measures such as the Consumer Price Index (CPI) to adjust past wages to present-day dollars, and many studies indicate that, once adjusted, the real value of today's minimum wage falls short of historical figures. The other options imply that the wage is either about the same, higher, or that a comparison cannot be made. This disregards the significant and quantifiable impacts of inflation on wage value over time. Hence, the conclusion aligns with the economic reality that the minimum wage, when adjusted for inflation, is indeed lower than it was 50 years ago.