When inflation is taken into account the national minimum wage will be lower than it was in 2004, even when it rises to £6.19 later this year.
That is according to a new report from the Resolution Foundation think tank, which found the 11p rise due to come in during October will be the third successive below-inflation increase.
Experts say that while the introduction of the minimum wage has helped some of the country's poorest people, the latest findings indicate its impact has now stalled.
Professor Alan Manning of the London School of Economics, the author of the report, said: "The minimum wage is one of the most popular policies of modern times but in some sense it's been a victim of its own success.
"Given the scale of the challenge now facing living standards, it might be time to think about more radical options for reform."
Prof Manning suggested introducing a higher minimum wage for workers aged over 30 who are more likely to have families to support, or for those living in pricey areas such as London and the South East.
He also suggested: "We could also do more to show that big companies in some sectors could afford to pay more than the legal minimum."
Meanwhile James Plunkett, senior analyst at the Resolution Foundation, said: "The question now is what role it [the minimum wage] can play in the future to raise living standards even further."
The value of the minimum wage is said to have "flatlined" to just over 50% of median earnings, compared with 60% in other countries including France.
If you're struggling financially and feel entitled to a raise at work, have a look at this guide on how best to ask your employer for a pay rise.