Skip Nav

Minimum wage: Updated research roundup on the effects of increasing pay

States set their own wages

❶Porter suggests that these figures more than double the actual decline in minimum wage workers. This article presents an overview of the issue of the rate of the minimum wage in the United States.

Minimum Wage

Navigate Guide
The minimum wage issue

Because it will not alleviate poverty. Because there are much better alternatives to help poor families, and because the minimum wage is a dishonest approach that hides the true cost of the policy. Tell us your opinion. Do you think raising the minimum wage will help or hinder?

Notify me of followup comments via e-mail. You can also subscribe without commenting. Blog - Latest News You are here: You might also like Examine female characters in literature for your research paper. The true cost of the fashion industry. Zika virus, microcephaly and Guillain-Barre as medical research topics. Among employed teenagers ages 16 to 19 paid by the hour, about 11 percent earned the minimum wage or less, compared with about 2 percent of workers age 25 and older.

There is a huge research literature associated with this issue, as detailed below. That work synthesizes some papers. In their conclusion , they write:.

Evidence leads us to conclude that moderate increases in the minimum wage are a useful means of raising wages in the lower part of the wage distribution that has little or no effect on employment and hours. This is what one seeks in a policy tool, solid benefits with small costs.

That said, current research does not speak to whether the same results would hold for large increases in the minimum wage.

Beneath the political claims and efforts on both sides is a profound philosophical debate between neoclassical economics — with its emphasis on aggregate growth and what is best for the market as a whole — and progressive economics, beginning with John Maynard Keynes and the New Deal, with an emphasis on shared prosperity and fairness.

Although there is no doubt that inequality has risen significantly over the past few decades, studies can be found to support positions on both sides of the minimum-wage issue, and questions remain about the precise relationship with inequality dynamics.

Scholarly debates over the minimum wage have taken a distinct shape over the past two decades. Those scholars examined the results of a New Jersey law raising the minimum wage, comparing the outcomes in the fast food industry to those in the bordering state of Pennsylvania, where wage laws remained the same.

Their study called into question textbook assumptions about how labor markets might work. Krueger and Card had to defend their findings in a follow-up to the original paper. The paper, from the University of Leicester, found that firms tend to respond to minimum wage increases not by reducing production or employment, but by raising prices. Overall, price increases are modest: William Lester and Michael Reich also looked at low-wage sectors in states that raised the minimum wage and compared them with those in bordering areas where there were no mandated wage changes.

The research generally supports the idea that raising the minimum wage would have varying effects across U. Throwing the Baby Out with the Bathwater?

A large firm might likewise try to squeeze more work out of its salaried managers and hire more part-time workers, to avoid benefits obligations. In short, inequality of income has grown substantially since the s Dalmut, , p. Minimum wage earners were worse off in than in or , though their numbers have improved since the implementation of the Fair Minimum Wage Act of Elwell, According to a study by economists, 15 percent of American workers earned minimum wage in the s.

By , that figure had declined to 4. Bureau of Labor Statistics, Minimum wage workers, Porter suggests that these figures more than double the actual decline in minimum wage workers.

This discrepancy is probably explained by the fact that tens of millions of workers make slightly less or slightly more than the minimum wage. Short-term agricultural workers, some minors, and the disabled can be legally employed for less than the minimum wage, and more than 1.

About percent more women and ethnic minorities than white males benefited from this pending raise Economic Policy Institute, The vast majority of minimum-wage workers occupy the service sector, which tends to be very stable.

McDonald's and Burger King will not likely relocate to another state or nation if the minimum wage increases locally or nationally Porter, Some employers who pay roughly the minimum wage have been willing to consistently keep their wages slightly higher than the local standard in order to attract good employees.

For similar reasons, other employers will not pay sub-minimum wage amounts to workers for example, to out-of-state minors even when doing so would be legal. The theory is that a worker's perception of receiving a fair or advantageous wage will improve worker performance and reduce employee turnover, which is invariably high and relatively costly in the service sector.

This principle is referred to in terms of shaping workers' incentives and acknowledging workers' reservation wage. A "reservation" wage denotes the minimum level of pay that a worker is willing to accept for a specific type of work. One might, for example, be willing to accept less pay to lower one's reservation wage for a job that is undemanding, familiar, or otherwise convenient e.

There is statistical evidence that a substantial increase in the minimum wage has triggered relatively consistent patterns of unemployment among the least-skilled workers. The 90 percent raise in the minimum wage in resulted in about 15, jobs losses; the increase in resulted in 90, job losses; and after , , long-term job losses can be linked with increases to the minimum wage.

Alternative approaches to increasing the minimum wage for the purposes of combating poverty include expanded tax credits which exist in the form of the Earned Income Tax Credit for low-income workers with two or more children , direct or indirect subsidies to workers, and subsidies to employers. All of these approaches transfer more of the burden for relieving poverty from the private sector to public resources.


Main Topics

Privacy Policy

While the real value of the minimum wage decreased its value by 33%, the executives of the places that employ people for minimum wage earn at least 15 million dollars a year, some make 63 thousand dollars an hour which is ten thousand dollars more than the average annual income (Nader 1).

Privacy FAQs

This article presents an overview of the issue of the rate of the minimum wage in the United States. The Fair Minimum Wage Act of established that the federal minimum wage would increase from $ an hour in to $ an hour in three stages by

About Our Ads

NBER WORKING PAPER SERIES MINIMUM WAGES AND EMPLOYMENT: A REVIEW OF EVIDENCE FROM THE NEW MINIMUM WAGE RESEARCH David Neumark William Wascher Working Paper . Minimum wage laws set the minimum hourly wage a worker can be paid. A minimum wage of $, for example, means a worker cannot legally contract with an employer to work for below $ an hour. The federal minimum wage sets the wage for the whole nation. In , the minimum wage was $

Cookie Info

The minimum wage Research Paper [meteor_slideshow slideshow=”arp2″] The federal minimum wage increased from $ to $ in July , then to $ in July and to $ in July In February , the nonpartisan Congressional Budget Office issued a report, “The Effects of a Minimum-Wage Increase on Employment and Family Income,” that explores two scenarios: Raising the minimum wage to $ or to $ The report concludes that there are distinct trade-offs.