February 15, 1995
50 Years of Research on the Minimum Wage
Introduction
For many years it has been a matter of conventional wisdom among economists that the minimum wage causes fewer jobs to exist than would be the case without it. This is simply a matter of price theory, taught in every economics textbook, requiring no elaborate analysis to justify. Were this not the case, there would be no logical reason why the minimum wage could not be set at $10, $100, or $1 million per hour.
Historically, defenders of the minimum wage have not disputed the disemployment effects of the minimum wage, but argued that on balance the working poor were better off. In other words, the higher incomes of those with jobs offset the lower incomes of those without jobs, as a result of the minimum wage [See, for example, Levitan and Belous, (1979)].
Now, the Clinton Administration is advancing the novel economic theory that modest increases in the minimum wage will have no impact whatsoever on employment. This proposition is based entirely on the work of three economists: David Card and Alan Krueger of Princeton, and Lawrence Katz of Harvard. Their studies of increases in the minimum wage in California, Texas and New Jersey apparently found no loss of jobs among fast food restaurants that were surveyed before and after the increase [See Card (1992b), Card and Krueger (1994), and Katz and Krueger (1992)].
While it is not yet clear why Card, Katz and Krueger got the results that they did, it is clear that their findings are directly contrary to virtually every empirical study ever done on the minimum wage. These studies were exhaustively surveyed by the Minimum Wage Study Commission, which concluded that a 10% increase in the minimum wage reduced teenage employment by 1% to 3%.
The following survey of the academic research on the minimum wage is designed to give nonspecialists a sense of just how isolated the Card, Krueger and Katz studies are. It will also indicate that the minimum wage has wide-ranging negative effects that go beyond unemployment. For example, higher minimum wages encourage employers to cut back on training, thus depriving low wage workers of an important means of long-term advancement, in return for a small increase in current income. For many workers this is a very bad trade-off, but one for which the law provides no alternative.
Summary of Research on the Minimum Wage
- The minimum wage reduces employment.
Currie and Fallick (1993), Gallasch (1975), Gardner (1981), Peterson (1957), Peterson
and
Stewart (1969).
- The minimum wage reduces employment more among teenagers than adults.
Adie (1973); Brown, Gilroy and Kohen (1981a, 1981b); Fleisher (1981);
Hammermesh
(1982); Meyer and Wise (1981, 1983a); Minimum Wage Study Commission (1981);
Neumark and Wascher (1992); Ragan (1977); Vandenbrink (1987); Welch (1974,
1978);
Welch and Cunningham (1978).
- The minimum wage reduces employment most among black teenage males.
Al-Salam, Quester, and Welch (1981), Iden (1980), Mincer (1976), Moore (1971),
Ragan
(1977), Williams (1977a, 1977b).
- The minimum wage helped South African whites at the expense of blacks.
Bauer (1959).
- The minimum wage hurts blacks generally.
Behrman, Sickles and Taubman (1983); Linneman (1982).
- The minimum wage hurts the unskilled.
Krumm (1981).
- The minimum wage hurts low wage workers.
Brozen (1962), Cox and Oaxaca (1986), Gordon (1981).
- The minimum wage hurts low wage workers particularly during cyclical downturns.
Kosters and Welch (1972), Welch (1974).
- The minimum wage increases job turnover.
Hall (1982).
- The minimum wage reduces average earnings of young workers.
Meyer and Wise (1983b).
- The minimum wage drives workers into uncovered jobs, thus lowering wages in those
sectors.
Brozen (1962), Tauchen (1981), Welch (1974).
- The minimum wage reduces employment in low-wage industries, such as retailing.
Cotterman (1981), Douty (1960), Fleisher (1981), Hammermesh (1981), Peterson
(1981).
- The minimum wage hurts small businesses generally.
Kaun (1965).
- The minimum wage causes employers to cut back on training.
Hashimoto (1981, 1982), Leighton and Mincer (1981), Ragan (1981).
- The minimum wage has long-term effects on skills and lifetime earnings.
Brozen (1969), Feldstein (1973).
- The minimum wage leads employers to cut back on fringe benefits.
McKenzie (1980), Wessels (1980).
- The minimum wage encourages employers to install labor-saving devices.
Trapani and Moroney (1981).
- The minimum wage hurts low-wage regions, such as the South and rural areas.
Colberg (1960, 1981), Krumm (1981).
- The minimum wage increases the number of people on welfare.
Brandon (1995), Leffler (1978).
- The minimum wage hurts the poor generally.
Stigler (1946).
- The minimum wage does little to reduce poverty.
Bonilla (1992), Brown (1988), Johnson and Browning (1983), Kohen and Gilroy
(1981),
Parsons (1980), Smith and Vavrichek (1987).
- The minimum wage helps upper income families.
Bell (1981), Datcher and Loury (1981), Johnson and Browning (1981), Kohen and
Gilroy
(1981).
- The minimum wage helps unions.
Linneman (1982), Cox and Oaxaca (1982).
- The minimum wage lowers the capital stock.
McCulloch (1981).
- The minimum wage increases inflationary pressure.
Adams (1987), Brozen (1966), Gramlich (1976), Grossman (1983).
- The minimum wage increases teenage crime rates.
Hashimoto (1987), Phillips (1981).
- The minimum wage encourages employers to hire illegal aliens.
Beranek (1982).
- Few workers are permanently stuck at the minimum wage.
Brozen (1969), Smith and Vavrichek (1992).
- The minimum wage has had a massive impact on unemployment in Puerto Rico.
Freeman and Freeman (1991), Rottenberg (1981b).
- The minimum wage has reduced employment in foreign countries.
Canada: Forrest (1982); Chile: Corbo (1981); Costa Rica: Gregory (1981); France:
Rosa
(1981).
- Characteristics of minimum wage workers
Employment Policies Institute (1994), Haugen and Mellor (1990), Kniesner (1981),
Mellor
(1987), Mellor and Haugen (1986), Smith and Vavrichek (1987), Van Giezen (1994).
Bibliography
Adams, F. Gerard. 1987. Increasing the Minimum Wage: The Macroeconomic Impacts.
Briefing
Paper, Economic Policy Institute (July).
Finds that an increase in the minimum wage from $3.35 to $4.65 over three years
would
increase the unemployment rate by less than 0.1% and the inflation rate by 0.2%.
Adie, Douglas K. 1973. Teen-Age Unemployment and Real Federal Minimum Wages.
Journal of
Political Economy, vol. 81 (March/April): 435-441.
Finds that the minimum wage is responsible for a considerable amount of teenage
unemployment.
Al-Salam, Nabeel; Quester, Aline; and Welch, Finis. 1981. Some Determinants of the Level
and Racial
Composition of Teenage Employment. In Rottenberg (1981a): 124-154.
Notes that in 1954, black teenage males were more likely to be employed than white
teenage males. Since that time, the proportion of black teenage males employed has
fallen sharply, while employment for white teenage males has risen. Expansion of
coverage of the minimum wage appears to be a major factor in this trend. Further
notes
that more than half of all teenagers would earn more in the absence of a minimum
wage.
Bauer, P.T. 1959. Regulated Wages in Under-developed Countries. In The Public Stake in
Union
Power, ed. Philip D. Bradley. Charlottesville, VA: University of Virginia Press,
324-349.
Argues that the negative effects of minimum wage laws in LDCs is even greater than
in
industrialized countries, because there is greater diversity of supply and demand for
labor
in LDCs. Also points out that in South Africa minimum wages helped whites at the
expense of blacks.
Behrman, Jere R.; Sickles, Robin C.; and Taubman, Paul. 1983. The Impact of Minimum
Wages on the
Distributions of Earnings for Major Race-Sex Groups: A Dynamic Analysis. American
Economic Review, vol. 73 (September): 766-778.
Finds that the minimum wage has helped white males and females while hurting black
males and females.
Bell, Carolyn Shaw. 1981. Minimum Wages and Personal Income. In Rottenberg (1981a):
429-458.
Finds that increases in the minimum wage would benefit few families with incomes
below
the poverty level. Much of the benefit would accrue to upper income families with
secondary earners, such as wives and children.
Beranek, William. 1982. The Illegal Alien Work Force, Demand for Unskilled Labor, and the
Minimum
Wage. Journal of Labor Research, vol. 3 (Winter): 89-99.
Finds that the minimum wage increases the employment demand for illegal aliens,
who
are less likely than legal residents to report violations of the labor laws.
Betsey, Charles L., and Dunson, Bruce H. 1981. Federal Minimum Wage Laws and the
Employment of
Minority Youth. American Economic Review, vol. 71 (May): 379-384.
Argues that employment losses from higher minimum wages have been
overstated and
that much of the higher unemployment among minority youth has been due to
cyclical
factors.
Bonilla, Carlos E. 1992. Higher Wages, Greater Poverty. Washington: Employment
Policies
Institute.
Finds that the 1991 increase in the federal minimum wage actually reduced the
income
of some single parents, after welfare and taxes are taken into account.
Brandon, Peter D. 1995. Jobs Taken by Mothers Moving from Welfare to Work and the
Effects of
Minimum Wages on this Transition. Washington: Employment Policies Institute
Foundation.
Finds a decrease in work by women on welfare in states raising their minimum wages
and
an increase in time on welfare in such states.
Brown, Charles. 1988. Minimum Wage Laws: Are They Overrated? Journal of Economic
Perspectives, vol. 2 (Summer): 133-145.
Finds that they employment impact of the minimum wage and its impact on reducing
poverty are both less than generally believed.
Brown, Charles; Gilroy, Curtis; and Kohen, Andrew. 1981a. Effects of the Minimum Wage
on Youth
Employment and Unemployment. In Minimum Wage Study Commission (1981), vol. 5,
pp. 1-26.
Finds that a 10% increase in the minimum wage will reduce teenage employment by
1%
to 3%.
Brown, Charles; Gilroy, Curtis; and Kohen, Andrew. 1981b. Time-Series Evidence of the
Effect of the
Minimum Wage on Teenage Employment and Unemployment. In Minimum Wage Study
Commission
(1981), vol. 5, pp. 103-127.
Finds that a 10% increase in the minimum wage will reduce teenage employment by
1%.
Brown, Charles; Gilroy, Curtis; and Kohen, Andrew. 1982. The Effect of the Minimum Wage
on
Employment and Unemployment. Journal of Economic Literature, vol. 20 (June):
487-528.
Summarizes a large volume of research on the minimum wage.
Brozen, Yale. 1962. Minimum Wage Rates and Household Workers. Journal of Law and
Economics, vol. 5 (October): 103-109.
Found that increases in the minimum wage drove low-wage workers into uncovered
occupations, such as household work. Predicts that broadening of coverage to such
occupations will increase structural unemployment.
Brozen, Yale. 1966. Wage Rates, Minimum Wage Laws, and Unemploy-ment. New
Individualist Re-
view, vol. 4 (Spring): 24-33.
Points out a contradiction between the Johnson Administration's desire to hold wage
increases to the rate of productivity growth, in order to reduce inflationary pressures,
and
its support for a higher minimum wage.
Brozen, Yale. 1969. The Effect of Statutory Minimum Wage Increases on Teen-age
Employment.
Journal of Law and Economics, vol. 12 (April): 109-122.
Finds that increases in the minimum wage only speed up wage increases that would
have
occurred over time. However, in the interval between an increase and the time when
productivity catches up to it results in higher unemployment and business failures. In
the
case of teenagers, many who are barred from jobs suffer long-term effects from the
failure
to gain job skills, thus injuring them permanently.
Card, David. 1992a. Using Regional Variation in Wages to Measure the Effects of the Federal
Minimum
Wage. Industrial and Labor Relations Review, vol. 46 (October): 22-37.
Finds no evidence that the April, 1990 increase in the minimum wage reduced
teenage
employment, but does find evidence that it led to higher wages.
Card, David. 1992b. Do Minimum Wages Reduce Employment? A Case Study of California,
1987-89.
Industrial and Labor Relations Review, vol. 46 (October): 38-54.
Finds no evidence that an increase in the California state minimum wage in July,
1988
led to any loss in teenage employment, but does find evidence of higher wages.
Card, David, and Krueger, Alan B. 1994. Minimum Wages and Employ-ment: A Case Study
of the Fast-Food Industry in New Jersey and Pennsylvania. American Economic
Review, vol. 84
(September): 772-793.
Finds no evidence of reduced employment from an increase in the New Jersey state
minimum wage in April, 1992.
Colberg, Marshall R. 1960. Minimum Wage Effects on Florida's Economic Development.
Journal of
Law and Economics, vol. 3 (October): 106-117.
Finds that after an increase in the minimum wage unemployment increased most in
the
areas where wages were lowest and least in areas where wages were highest
beforehand.
Colberg, Marshall. 1981. Minimum Wages and the Distribution of Economic Activity. In
Rottenberg
(1981a): 247-263.
Examines votes on the minimum wage and finds heavy support for it in high wage
states
of the North and opposition from low wage states in the South. This suggests that the
North was attempting to reduce the South's competitive advantage in wages.
Corbo, Vittorio. 1981. The Impact of Minimum Wages on Industrial Employment in Chile. In
Rottenberg
(1981a): 340-356.
Finds substantial job losses from the minimum wage in Chile.
Cotterill, Philip. 1981. Differential Legal Minimum Wages. In Rottenberg (1981a):
296-316.
Favors differential minimum wages to reduce the impact of the minimum wage.
Cotterman, Robert F. 1981. The Effects of Federal Minimum Wages on the Industrial
Distribution of
Teenage Employment. In Rottenberg (1981a): 42-60.
Finds that minimum wages have altered the distribution of teenage
employment.
Teenagers are less likely to be employed in low wage industries, such as retailing, and
increase employment in high wage industries, such as manufacturing.
Cox, James C., and Oaxaca, Ronald L. 1981. The Determinants of Minimum Wage Levels
and Coverage
in State Minimum Wage Laws. In Rottenberg (1981a): 403-428.
Finds that union support for the minimum wage is significant politically.
Cox, James C., and Oaxaca, Ronald L. 1982. The Political Economy of Minimum Wage
Legislation.
Economic Inquiry, vol. 20 (October): 533-555.
Explains why unions support minimum wages.
Cox, James C., and Oaxaca, Ronald L. 1986. Minimum Wage Effects With Output
Stabilization.
Economic Inquiry, vol. 24 (July): 443-453.
Finds that the minimum wage causes unskilled wages to be 15.7% higher than they
otherwise would be, and that this causes employment to be 11.2% lower than it
otherwise
would be.
Cunningham, James. 1981. The Impact of Minimum Wages on Youth Employment, Hours of
Work, and
School Attendance: Cross-sectional Evidence from the 1960 and 1970 Censuses. In Rottenberg
(1981a):
88-123.
Finds that minimum wages discourage part-time work and lowers school attendance.
Currie, Janet, and Fallick, Bruce. 1993. A Note on the New Minimum Wage Research.
National Bureau
of Economic Research Working Paper No. 4348 (April).
Finds that employed individuals affected by the increases in the minimum wage in
1979
and 1980 were 3% to 4% less likely to be employed a year later. Since the
methodology
employed is similar to that in Card (1992a and 1992b), it casts doubt on any
generalization of his conclusions.
Datcher, Linda P., and Loury, Glenn C. 1981. The Effect of Minimum Wage Legislation on
the
Distribution of Family Earnings Among Blacks and Whites. In Minimum Wage Study
Commission (1981), vol. 7, pp. 125-146.
Finds that an increase in the minimum wage increases white family incomes more
than
black family incomes. Also, middle- and high-income families benefit more than
low-income families.
Douty, H.M. 1960. Some Effects of the $1.00 Minimum Wage in the United States.
Economica,
vol. 27 (May): 137-147.
Finds that the increase in the minimum wage from 75 cents to $1.00 in 1956 did lead
to
an increase in pay for many workers, but at the cost of jobs. Long-term employment
losses by industry ranged from 3.2% to 15%.
Ehrenberg, Ronald G., and Schumann, Paul L. 1981. The Overtime Pay Provisions of the Fair
Labor
Standards Act. In Rottenberg (1981a): 264-295.
Opposes restrictions on mandatory overtime.
Employment Policies Institute. 1994. The Low-Wage Workforce. Washington:
Employment
Policies Institute.
Presents data on characteristics of workers earning the minimum wage.
Feldstein, Martin. 1973. The Economics of the New Unemployment. The Public
Interest (Fall):
14-15.
Argues that the minimum wage prevents many young people from accepting jobs that
would provide them with on-the-job training, thus contributing to long-term
unemploy-
ment.
Fleisher, Belton M. 1981. Minimum Wage Regulation in Retail Trade. Washington:
American
Enterprise Institute.
Extension of the minimum wage to retail trade lowered employment in that industry
by
as much as 500,000, with the main impact on teenagers. Also finds that higher
minimum
wages led to a scale-back of fringe benefits and training.
Forrest, David. 1982. Minimum Wages and Youth Unemployment: Will Britain Learn from
Canada?
Journal of Economic Affairs, vol. 2 (July): 247-250.
Estimates that 40% of the increase in teenage unemployment in Canada since the
1950s
is due to higher minimum wages.
Freeman, Alida Castillo, and Freeman, Richard B. 1991. Minimum Wages in Puerto Rico:
Textbook Case
of a Wage Floor? National Bureau of Economic Research Working Paper No. 3759 (June).
Finds that the minimum wage has had a massive impact on the labor market in Puerto
Rico.
Gallasch, H.F., Jr. 1975. Minimum Wages and the Farm Labor Market. Southern
Economic
Journal, vol. 41 (January): 480-491.
Finds that the 1967 extension of the minimum wage to the farm labor market, which
had
previously been uncovered, led to an increase in wages and a reduction in
employment.
Gardner, Bruce. 1981. What Have Minimum Wages Done in Agriculture? In Rottenberg
(1981a): 210-232.
Finds that extension of the minimum wage to farm workers has increased wages but
reduced employment.
Gordon, Kenneth. 1981. The Impact of Minimum Wages on Private Household Workers. In
Rottenberg
(1981a): 191-209.
Finds that the minimum wage has led to a dramatic reduction in household workers.
Also
notes that the policy of enforcement of labor laws by complaint converts the
minimum
wage from an instrument of public policy to a tool of private disputes.
Gramlich, Edward M. 1976. Impact of Minimum Wages on Other Wages, Employment, and
Family
Incomes. Brookings Papers on Economic Activity (No. 2): 409-461.
Finds that raising the minimum wage above 40 to 50 percent of median
wages leads to
increased compliance costs, higher unemployment, workers forced to leave full-time
work
for part-time work, more benefits for high-income families, and inflationary effects on
prices.
Gregory, Peter. 1981. Legal Minimum Wages as an Instrument of Social Policy in Less
Developed
Countries, with Special Reference to Costa Rica. In Rottenberg (1981a): 377-402.
Finds that the minimum wage has been ineffective in reducing income inequality.
Grossman, Jean B. 1983. The Impact of the Minimum Wage on Other Wages. Journal of
Human
Resources, vol. 18 (Summer): 359-378.
Finds that an increase in the minimum wage increases wages of those above the
minimum
wage for two reasons. First, workers above the minimum will want to restore their
relative wage position, and second there will be increased demand for workers above
the
minimum to do the work previously done by those below the minimum.
Grossman, Jonathan. 1978. Fair Labor Standards Act of 1938: Maximum Struggle for a
Minimum Wage.
Monthly Labor Review, vol. 101 (June): 22-30.
Reviews the legislative history of passage of the first federal minimum wage law.
Notes
the limited coverage of the initial legislation.
Hall, Robert E. 1982. The Minimum Wage and Job Turnover in Markets for Young Workers.
In The
Youth Labor Market Problem: Its Nature, Causes, and Consequences, ed. Richard B.
Freeman
and David A. Wise, pp. 475-497. Chicago: University of Chicago Press.
Finds that the higher unemployment among youth resulting from the minimum wage
is
primarily due to higher job turnover.
Hammermesh, Daniel S. 1981. Employment Demand, the Minimum Wage and Labor Costs.
In Minimum
Wage Study Commission (1981), vol. 5, pp. 27-84.
Finds that a 10% increase in the minimum wage will reduce teenage
employment by 1.2%
overall, with smaller declines in services and retail trade and a higher impact in
manufacturing.
Hammermesh, Daniel S. 1982. Minimum Wages and the Demand for Labor. Economic
Inquiry,
vol. 20 (July): 365-380.
Finds that a minimum wage reduces teenage employment.
Hashimoto, Masanori. 1981. Minimum Wages and On-the-Job Training. Washington:
American
Enterprise Institute.
Finds that minimum wage laws lead to a curtailment of training by employers.
Hashimoto, Masanori. 1982. Minimum Wage Effects on Training on the Job. American
Economic
Review, vol. 72 (December): 1070-1087.
Finds that minimum wages reduce training, first because workers lose job
opportunities,
and hence on the job training, and second because employers will no longer be able
to
afford to give such training.
Hashimoto, Masanori. 1987. The Minimum Wage Law and Youth Crimes: Time-Series
Evidence.
Journal of Law and Economics, vol. 30 (October): 443-464.
Suggests that increases in the minimum wage may be responsible for increases in
teenage
crime rates.
Haugen, Steven E., and Mellor, Earl F. 1990. Estimating the Number of Minimum Wage
Workers.
Monthly Labor Review, vol. 113 (January): 70-74.
Estimates that two-fifths of workers reporting wage rates at or below the minimum
wage
in 1988 had supplements raising their wage rates above the minimum. However,
some
1.5 million salaried workers may also make the minimum wage or less on an hourly
rate.
Holcombe, Randall G., and Metcalf, John G. 1977. The Appeal of Minimum Wage Laws: A
Dynamic
Analysis. Public Choice, vol. 29 (Spring): 139-141.
Explains the popularity of minimum wage laws even among those who lose their jobs
as
a result as stemming from the high turnover in the low-wage market. Although a
worker
may initially lose his job because of an increase in the minimum wage, he will expect
to
get other jobs in the future that will pay more.
Iden, George. 1980. The Labor Force Experience of Black Youth: A Review. Monthly
Labor
Review, vol. 103 (August): 10-16.
Concedes that the minimum wage has had a significant negative effect on teenage
employment, especially for blacks.
Johnson, William R., and Browning, Edgar K. 1981. Minimum Wages and the Distribution of
Income.
In Minimum Wage Study Commission (1981), vol. 7, pp. 31-58.
Finds that much of the benefits of a higher minimum wage accrue to high-income
families
and that many low-income families benefit at the expense of other low-income
families.
Johnson, William R., and Browning, Edgar K. 1983. The Distributional and Efficiency Effects
of
Increasing the Minimum Wage: A Simulation. American Economic Review, vol.
73
(March): 204-211.
Finds that a 22% increase in the minimum wage in 1976 would have increased the
incomes of the lowest 10% of households by just $200 million.
Katz, Lawrence F., and Krueger, Alan B. 1992. The Effect of the Minimum Wage on the
Fast-Food
Industry. Industrial and Labor Relations Review, vol. 46 (October): 6-21.
Finds evidence that an increase in the minimum wage led to an increase in
employment
in Texas.
Kaun, David E. 1965. Minimum Wages, Factor Substitution and the Marginal Producer.
Quarterly
Journal of Economics, vol. 79 (August): 478-486.
The minimum wage hurts small businesses.
Keech, William R. 1977. More on the Vote Winning and Vote Losing Qualities of Minimum
Wage Laws.
Public Choice, vol. 29 (Spring): 133-137.
Suggests that support for the minimum wage even among those adversely affected
may
result from those benefiting having a clearer perception of the benefits than those who
are
harmed have of the negative effects.
Kniesner, Thomas J. 1981. The Low-Wage Workers: Who Are They? In Rottenberg (1981a):
459-481.
Finds that 60% of low-wage workers are women and less than 40% are teenagers.
Also
finds that low wages are not strongly associated with poverty. Less than 25% of low
wage workers are heads of households, and only 30% live in families with incomes
below
the poverty level.
Kohen, Andrew I., and Gilroy, Curtis L. 1981. The Minimum Wage, Income Distribution, and
Poverty.
In Minimum Wage Study Commission (1981), vol. 7, pp. 1-30.
Since many low-wage workers live in high-income families, increasing the minimum
wage is an ineffective way of increasing the incomes of poor families.
Kosters, Marvin, and Welch, Finis. 1972. The Effects of Minimum Wages on the Distribution
of Changes
in Aggregate Employment. American Economic Review, vol. 62 (June): 323-332.
Finds that increases in the minimum wage have a significant effect on employment
patterns, especially for nonwhite teenagers. As a consequence, teenagers are less able
to
find jobs during periods of normal employment growth and are more likely to lose
their
jobs during cyclical downturns.
Krumm, Ronald J. 1981. The Impact of the Minimum Wage on Regional Labor
Markets.
Washington: American Enterprise Institute.
Finds that lower-skilled workers tend to be disemployed when minimum
wages are
applied uniformly, leading to higher wages for higher-skilled workers. Also, because
the
cost of living varies from region to region, the real minimum wage will also vary.
Lang, Kevin. 1995. Minimum Wage Laws and the Distribution of Employment.
Washington:
Employment Policies Institute Foundation.
Finds that increases in the minimum wage leads fast food establishments to replace
adult
workers with younger workers, and to replace full-time workers with part-time
workers.
Leffler, Keith B. 1978. Minimum Wages, Welfare, and Wealth Trans-fers to the Poor.
Journal of Law
and Economics, vol. 21 (October): 345-358.
Finds that increases in the minimum wage lead to increases in welfare rolls. Argues
that
advocates for the poor may favor higher minimum wages in order to increase the
number
of people on welfare, because welfare benefits may exceed the income from work.
Leighton, Linda, and Mincer, Jacob. 1981. The Effects of Minimum Wages on Human Capital
Formation.
In Rottenberg (1981a): 155-173.
Finds that minimum wages discourage on-the-job training.
Levitan, Sar, and Belous, Richard S. 1979. The Minimum Wage Today: How Well Does It
Work?
Monthly Labor Review, vol. 102 (July): 17-21.
Argues that the benefits of the minimum wage outweigh its costs.
Linneman, Peter. 1982. The Economic Impacts of Minimum Wage Laws: A New Look at an
Old
Question. Journal of Political Economy, vol. 90 (June): 443-469.
Finds that the disemployment effects of the minimum wage fall mainly on blacks,
females, restricted individuals, residents of small cities, those with low education, the
old,
and non-union members. Beneficiaries of the minimum wage mainly are males and
union
members.
Mattila, J. Peter. 1981. The Impact of Minimum Wages on Teenage Schooling and on the
Part-Time/Full-Time Employment of Youths. In Rottenberg (1981a): 61-87.
Finds that the disemployment effects of the minimum wage have encouraged youths
to
stay in school. Also, youths have shifted out of full-time work and into part-time
work,
in order to accommodate schooling.
McCulloch, J. Huston. 1981. Macroeconomic Implications of the Minimum Wage. In
Rottenberg (1981a):
317-326.
Finds negligible effects from the minimum wage on inflation. However, it may
reduce
the size of the capital stock by reducing profitability in covered industries, thereby
leading
to lower wages in the long run.
McKee, Michael, and West, Edwin G. 1984. Minimum Wage Effects on Part-Time
Employment.
Economic Inquiry, vol. 22 (July): 421-428.
Finds that the minimum wage discourages part-time employment in favor of full-time
jobs.
McKenzie, Richard B. 1980. The Labor Market Effects of Minimum Wage Laws: A New
Perspective.
Journal of Labor Research, vol. 1 (Fall): 255-264.
Argues that increases in the minimum wage, which apply only to money wages, will
lead
to a reduction in non-money wages, such as fringe benefits. Thus employers can
respond
to a higher minimum wage by lowering benefits by the same amount.
Mellor, Earl F. 1987. Workers at the Minimum Wage or Less: Who They Are and the Jobs
They Hold.
Monthly Labor Review, vol. 110 (July): 34-38.
Finds that those earning at the minimum wage or less consist largely of young
persons
and women. The majority worked part-time in services or sales. Since many of these
people probably also received commissions or tips, the number of workers earning the
minimum wage or less may be overstated.
Mellor, Earl F., and Haugen, Steven E. 1986. Hourly Paid Workers: Who They Are and What
They Earn.
Monthly Labor Review, vol. 109 (February): 20-26.
Finds that 60% of those earning the minimum wage or less are under age 25 and
one-third were teenagers.
Meyer, Robert H., and Wise, David A. 1981. Discontinuous Distributions and Missing
Persons: The
Minimum Wage and Unemployed Youth. In Minimum Wage Study Commission (1981),
vol. 5,
pp. 175-201.
Finds that abolition of the minimum wage would increase employment by
out-of-school
youth by 6%.
Meyer, Robert H., and Wise, David A. 1983a. The Effects of the Minimum Wage on the
Employment
and Earnings of Youth. Journal of Labor Economics, vol. 1 (January): 66-100.
Estimates that abolition of the minimum wage would have led to significantly higher
employment among youth, especially black youth. Finds no evidence of higher
earnings
from the minimum wage.
Meyer, Robert H., and Wise, David A. 1983b. Discontinuous Distributions and Missing
Persons: The
Minimum Wage and Unemployed Youth. Econometrica, vol. 51 (November):
1677-1698.
Finds that if the minimum wage did not exist in 1978, employment among
out-of-school
young men would have been 7% higher. Also, the average earnings of youth would
have
been higher.
Mincer, Jacob. 1976. Unemployment Effects of Minimum Wages. Journal of Political
Economy,
vol. 84 (August): S87-S104.
Finds that the negative effects of a minimum wage increase are greatest for nonwhite
teenagers. Moreover, the disemployment effects on the size of the labor force are
greater
than the effects on the unemployment rate.
Mincy, Ronald B. 1990. Raising the Minimum Wage: Effects on Family Poverty. Monthly
Labor
Review, vol. 113 (July): 18-25.
Finds a significant impact on reducing poverty from an increase in the minimum
wage.
This is because the disemployment impact falls mainly on teenagers, whose
contribution
to family income is small.
Minimum Wage Study Commission. 1981. Report, 7 vols. Washington: U.S.
Government Printing
Office.
Concludes that a 10% increase in the minimum wage will reduce teenage employment
by
1%-3%.
Moore, Thomas G. 1971. The Effect of Minimum Wages on Teenage Unemployment Rates.
Journal
of Political Economy, vol. 79 (July/August): 897-902.
Finds that the minimum wage increases unemployment primarily for nonwhite
teenagers.
Neumark, David, and Wascher, William. 1992. Employment Effects of Minimum and
Subminimum
Wages: Panel Data on State Minimum Wage Laws. Industrial and Labor Relations
Review,
vol. 46 (October): 55-81.
Finds that a 10% increase in the minimum wage reduces teenage employment by 1%
to
2%, and a decline of 1.5% to 2% among young adults.
Parsons, Donald O. 1980. Poverty and the Minimum Wage. Washington: American
Enterprise
Institute.
Finds that the minimum wage mainly reallocates income among low-wage workers,
benefiting adult females and hurting teenagers of both sexes.
Peterson, John M. 1957. Employment Effects of Minimum Wages, 1938-50. Journal of
Political
Economy, vol. 65 (October): 412-430.
One of the first empirical studies to show that minimum wages reduce employment.
Peterson, John M. 1981. Minimum Wages: Measures and Industry Effects.
Washington: American
Enterprise Institute.
Calculates the impact of the minimum wage on different industries. The negative
employment effects primarily impact low-wage industries such as retailing.
Peterson, John M., and Stewart, Charles T., Jr. 1969. Employment Effects of Minimum
Wage
Rates. Washington: American Enterprise Institute.
Summarizes a large number of studies finding negative employment effects from
minimum wages.
Phillips, Llad. 1981. Some Aspects of the Social Pathological Behavior Effects of
Unemployment among
Young People. In Rottenberg (1981a): 174-190.
Finds that primary impact of minimum wage is on young males, especially black
males.
This has encouraged continued school enrollment and entry into the armed forces.
However, it has also encouraged "illegitimate" alternatives to employment, such as
crime.
Ragan, James F., Jr. 1977. Minimum Wages and the Youth Labor Market. Review of
Economics and
Statistics, vol. 59 (May): 129-136.
Confirms that higher minimum wage rates reduce youth employment and increases
youth
unemployment rates, especially for nonwhite males.
Ragan, James F., Jr. 1981. The Effect of a Legal Minimum Wage on the Pay and
Employment of Teenage
Students and Nonstudents. In Rottenberg (1981a): 11-41.
Because the minimum wage reduces employment for teenagers, government funds
spent
on job training for teenagers must be counted as part of the cost of the minimum
wage.
Rosa, Jean-Jacques. 1981. The Effect of Minimum Wage Regulation in France. In Rottenberg
(1981a):
357-376.
Finds that the minimum wage reduces employment of youth in France, especially
males.
Rottenberg, Simon. 1981a. The Economics of Legal Minimum Wages. Washington:
American Enterprise Institute.
Collection of papers.
Rottenberg, Simon. 1981b. Minimum Wages in Puerto Rico. In Rottenberg (1981a): 327-339.
Finds that the minimum wage has caused massive disemployment in Puerto Rico and
lowered the overall standard of living.
Smith, Ralph E., and Vavrichek, Bruce. 1987. The Minimum Wage: Its Relation to Incomes
and Poverty.
Monthly Labor Review, vol. 110 (June): 24-30.
Finds that 70% of workers earning the minimum wage in 1985 lived in families in
which
at least one other member held a job. Also, teenagers held almost one-third of all
jobs
paying the minimum wage.
Smith, Ralph E., and Vavrichek, Bruce. 1992. The Mobility of Minimum Wage Workers.
Industrial
and Labor Relations Review, vol. 46 (October): 82-88.
Examines a panel of workers earning the minimum wage in the mid-1980s and finds
that
over 60% were earning more than the minimum wage a year later, with gains
averaging
20%.
Sowell, Thomas. 1977. Minimum Wage Escalation. Stanford, CA: Hoover Institution
Press.
Argues that indexing the minimum wage would magnify its problems.
Steindl, Frank G. 1973. The Appeal of Minimum Wage Laws and the Invisible Hand in
Government.
Public Choice, vol. 14 (Spring): 133-136.
Argues that political support for the minimum wage results from the fact that those
who
benefit from a modest increase will outnumber those who lose.
Stigler, George J. 1946. The Economics of Minimum Wage Legislation. American
Economic
Review, vol. 36 (June): 358-365.
Argues that a minimum wage will reduce output and decrease the earnings of the
poor.
Tauchen, George E. 1981. Some Evidence on Cross-Sector Effects of the Minimum Wage.
Journal of
Political Economy, vol. 89 (June): 529-547.
Finds that increases in the minimum wage tend to lower wages for those in uncovered
sectors, because there is increased demand for uncovered jobs from those no longer
employable at the minimum wage.
Taylor, Lowell J. 1993. The Employment Effect in Retail Trade of a Minimum Wage:
Evidence from
California. Washington: Employment Policies Institute.
Criticizes Card (1992b).
Trapani, John M., and Moroney, J.R. 1981. The Impact of Federal Minimum Wage Laws on
Employment
of Seasonal Cotton farm Workers. In Rottenberg (1981a): 233-246.
Finds that extension of the minimum wage to seasonal cotton workers in 1966 led to
a
substitution of mechanical processes for labor.
Vandenbrink, Donna C. 1987. The Minimum Wage: No Minor Matter for Teens.
Economic
Perspectives, Federal Reserve Bank of Chicago, vol. 11 (March/April): 19-28.
Finds large reductions in teenage employment from an increase in the minimum wage.
Van Giezen, Robert W. 1994. Occupational Wages in the Fast-Food Industry. Monthly
Labor
Review, vol. 117 (August): 24-30.
Shows that wages in the fast-food industry are closely tied to the minimum wage.
Welch, Finis. 1974. Minimum Wage Legislation in the United States. Economic
Inquiry, vol. 12
(September): 285-318.
Finds that the minimum wage has reduced employment, especially among teenagers;
it
has made teenagers more vulnerable to the business cycle; and has forced teenagers
out
of covered occupations into those not covered by the minimum wage.
Welch, Finis. 1978. Minimum Wages: Issues and Evidence. Washington: American
Enterprise
Institute.
Finds that those primarily affected by the minimum wage are the aged, teenagers, and
part-time workers.
Welch, Finis, and Cunningham, James. 1978. Effects of Minimum Wages on the Level and
Age
Composition of Youth Employment. Review of Economics and Statistics, vol. 60
(February): 140-145.
Finds that in 1970 the minimum wage reduced employment of 14-15 year olds by
46%,
by 27% for those 16-17, and by 15% for those 18-19.
Wessels, Walter J. 1980. Minimum Wages, Fringe Benefits, and Working Conditions.
Washington:
American Enterprise Institute.
Finds that increases in the minimum wage lead to a reduction in fringe benefits and a
deterioration of working conditions.
West, E.G. 1980. The Unsinkable Minimum Wage. Policy Review (Winter): 83-95.
Argues that economists should do a better job of explaining the negative effects of the
minimum wage.
Williams, Walter. 1977a. Government Sanctioned Restraints that Reduce Economic
Opportunities for
Minorities. Policy Review (Fall): 7-30.
Argues that minimum wage laws have had a disproportionately negative effect on
black
teenagers.
Williams, Walter. 1977b. Youth and Minority Unemployment. Study prepared for the
Joint
Economic Committee, U.S. Congress. Joint Committee Print, 95th Congress, 1st session.
Washington: U.S.
Government Printing Office.
Points out that in 1947, prior to expansion of the minimum wage, black teenage
unemployment was actually lower than white teenage unemployment, and that teenage
unemployment generally was sharply lower than it is today.
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