The federal minimum wage is increased each year with inflation. True False
The correct answer and explanation is:
The correct answer is False.
The federal minimum wage is not automatically increased each year with inflation. While inflation can influence the purchasing power of the minimum wage, any adjustments to the federal minimum wage require new legislation or action from the federal government. Currently, the federal minimum wage is set by law, and changes can only occur when Congress passes new legislation to increase it. As of now, the federal minimum wage has not been regularly increased in line with inflation.
For instance, the last federal minimum wage increase occurred in 2009 when it was raised to $7.25 per hour. Since then, there has been no automatic adjustment to account for inflation or changes in the cost of living. Some states and local governments have implemented their own minimum wage increases to keep up with inflation, but these are separate from federal laws.
In contrast, some countries have systems where the minimum wage is automatically adjusted based on inflation or cost-of-living indexes. However, the U.S. has chosen not to use such a mechanism for the federal minimum wage, which means that its value can decrease over time if inflation outpaces the wage rate.
While there are ongoing debates about whether the federal minimum wage should be increased to keep up with inflation or to address living costs, any changes to the wage must be made through legislative processes rather than automatic inflation-based adjustments.