202 Homework #3: CPI Data

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Step One: Find historical data on the Consumer Price Index.
• Go to the Bureau of Labor Statistics
• Click on the tab, BLS Popular Series.
• Click on Top Picks.
• Under Price indexes, check the box for “CPI for All Urban Consumers (CPI-U) 1982-84=100 (Unadjusted)”
• Click on Retrieve Data. (bottom of page)
• Click on More Formatting Options at the right side of the page.
• In the box that says “Select the time frame for your data,”

∘ Specify the year range: 1938 to 2020
∘ Specify the time period: Annual Data
∘ Click: Retrieve Data
∘ You should have a table showing the annual Consumer Price Index for years 1938 to 2020.

Note: The price index for 2020 is scheduled to be released January 13, 2020. If you are completing this homework prior to release of the 2020 data, your table of annual data will stop at 2019. So you may answer the following questions using 2019 instead of 2020 data.

Step Two: Find data on minimum wages.
• Go to the Department of Labor website (http://www.dol.gov/).
• Look under Agencies and find the Wage and Hour Division (WHD).
• Click on the topic, “Wages.”

Step Three: Answer the following questions.
1. What is the current federal minimum wage (FLSA Minimum Wage)_______________?
• Click on Historical Minimum Wage Rates
2. What was the first federal minimum wage (effective 1938) _______________?
3. What was the federal minimum wage in 1978? _______________?
4. In what year was the last increase in the federal minimum wage______________?

Step Four: Adjust wages using the CPI indexes.
5. What would the purchasing power of 1938 minimum wage be in 2020 dollars______________?
• Note: Use the formula below to convert the 1938 wage to 2020 dollars. Put the CPI for the year you are converting from in the denominator, and the CPI for the year you are trying to find in the numerator.

Wage in 2020 dollars = Wage in 1938 X CPI in Year 2020/CPI in Year 1938

6. What would the purchasing power of 1978 minimum wage be in 2020 dollars______________?
7. Assume that the federal minimum wage were automatically adjusted every year using the CPI. What would the purchasing power of the current federal minimum wage be in 2020 dollars_________?

Step Five: State minimum wages.
• Return to the Minimum Wage page. Click on Minimum Wage Laws in the States.
8. How many states have minimum wages above the federal minimum wage___________? Note: See Table. Do not include municipal minimum wages, e.g. District of Columbia or Seattle or territorial information such as American Samoa.
9. As of January 2021, which state or states have the highest minimum wage(s) ____________? Note: Do not include municipal minimum wages, e.g. District of Columbia or Seattle.
10. President Truman was paid a salary of $100,000 in 1949. President Obama's salary in 2011 was $400,000. Who was paid the higher salary in real terms_______________?
Note: Convert either Obama’s salary to 1949 dollars or Truman’s salary to 2011 dollars.