• iknowitwheniseeit@lemmynsfw.com
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    3 months ago

    That’s not how compound increases are measured.

    We can use the compound interest formula for this.

    A = P * (1 + r) ^ t
    
    • A is the final amount.
    • P is the starting amount (the principal).
    • r is the rate (as a proportion, so 50% would be 0.5).
    • t is the time.

    To figure out the annual increase for the whole time we can plug in what we know and solve for what we don’t:

    7.25 = 0.25 * (1+r) ^ 80
    29 = (1+r) ^ 80 years
    1.043 = 1+r
    0.043 = r
    

    So that’s about 4.3% increase per year over the 80 years.

    Now we can see what we would have as minimum wage if it had continued over the past 15 years:

    A = 7.25 * (1+0.043) ^ 15
    A = 7.25 * 1.043 ^ 15
    A = 7.25 * 1.88
    A = 13.63
    

    So that’s a $13.63 minimum wage.