Fact check: Elizabeth Warren's claim that minimum wage supported her family in the 1960s

  • Sen. Elizabeth Warren, D-Mass., speaks in Sioux City, Iowa, on Jan. 5.

    Sen. Elizabeth Warren, D-Mass., speaks in Sioux City, Iowa, on Jan. 5. Bloomberg photo by Daniel Acker

 
 

"Because when I was a kid, a minimum wage job in America would support a family of three. It would pay a mortgage, keep the utilities on and put food on the table. Today, a minimum-wage job in America will not keep a mama and a baby out of poverty." -- Sen. Elizabeth Warren, D-Mass., remarks in Council Bluffs, Iowa, on Jan. 4

-- -- --

A reader wondered about this statement by the likely 2020 presidential contender. "Is this true?" he asked. "Warren was born in 1949, so let's say she's talking about 1960."

She's actually talking about 1961. That's when her father, a Montgomery Ward salesman, had a heart attack, and so her mother started to earn money by answering phones in the catalog department at Sears, Roebuck and Co. "A job at Sears allowed my mother to eke out a living for a family of three," wrote Warren in her memoir. She turned 12 in 1961.

Let's see what the data shows.

President John F. Kennedy scored a big victory when he persuaded Congress to raise the minimum wage in 1961 from $1 to $1.15. Congress also extended the minimum wage for retail or service enterprises that maintain one or more stores, among other categories, which started at just $1.

The higher wage applied to workers engaged in interstate commerce. That amounted to about 24 million workers, with another 3.6 million workers added at the lower wage. Both categories started getting a wage of $1.25 in 1965.

by signing up you agree to our terms of service
                                                                                                                                                                                                                       
 

So was Warren's mother covered under the $1 wage or the $1.15 wage? That's unclear, though answering the phones for catalog sales might have been considered interstate commerce.

It makes a difference in determining whether Warren is right. At $1, her mother would have earned $2,080. (We are assuming a full-time job of 40 hours a week for 52 weeks.) That is well below the Census Bureau's average poverty threshold for a three-person family of $2,383 in 1961 -- and also the level the Warren campaign urged us to consider: female head of household for a family of three. That was $2,164.

But at the $1.15 wage, her mother would have just cleared the average poverty threshold, earning $2,392, or $9 above it.

Moreover, a federal report from 1961 shows most retail workers earned more than the minimum wage.

Warren's broader point is largely correct if you use the official poverty rate. The minimum wage has not kept up with inflation. In the 1960s, a minimum-wage job may have kept a three-person family out of poverty. Now, such a job would not keep a single mother with a child out of poverty.

                                                                                                                                                                                                                       
 

The annual earnings from today's minimum wage is $15,080. In contrast, the poverty level for a two-person family is $15,877 and an adult and one child is $16,895.

In today's dollars, $1.15 would be worth $9.73, compared to today's minimum wage of $7.25. So, if the wage had kept pace with inflation, annual earnings would be $20,238 -- compared to the poverty line for a family of three with one child under 18 of $19,730.

There's a separate debate about whether the official poverty measures adequately capture the range of services available to poor Americans, but we are going to keep this simple and focus on the official rate. Many experts say the official rate excludes social policies that the United States has developed and expanded to reduce poverty, and so the Supplemental Poverty Measure was developed. "In 2012 alone, the combined effect of all federal tax, cash and in-kind aid programs was to lift approximately 14.5 percent of the population -- over 45 million people -- out of poverty," according to the 2014 report by the White House Council of Economic Advisers.

Housing costs have also risen. The median price of a new house in 1965 was about $20,000, which adjusted for inflation is about $155,000. The median price of a new house in 2018 was about $325,000.

                                                                                                                                                                                                                       
 

The Warren campaign said Warren's parents signed a $13,900 mortgage in 1960 that stipulated monthly payments of $87.57. That would have been 44 percent of the $1.15-an-hour wage and more than 50 percent of a $1 wage. A general rule is that no more than 30 percent of income should go to housing so money would have been tight under either wage scale.

As we noted, Warren's overall point is correct: The minimum wage has not kept pace with inflation. In 1961, it could have kept a three-person family out of poverty. But today, it wouldn't even keep a two-person family out of poverty, at least according to the official poverty rate. Her case glosses over the fact that the official poverty rate may not be the best metric, but there is little debate that the minimum wage has not kept pace with inflation.

As for our reader's question, the answer depends on whether Warren's mother in 1961 qualified for a minimum wage of $1 or $1.15. She was either close to the edge of the poverty line or just under it, depending on the data you examine. Since we do not know what she earned, we will leave this unrated.

0 Comments
 
Article Comments ()
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.