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State Minimum Wages: A Policy That Works |
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From Economic Policy Institute: Although the federal minimum wage last rose in September 1997, minimum wages in the United States have not been static since then. For young adults and adults with no college education, groups with smaller percentages of low-wage workers, there is some evidence that minimum wage increases lead to higher wages without reducing either employment or labor supply. Because of the small numbers in the sample, any results for racial minorities may well be weak. Many factors other than the minimum wage can lead to different labor market outcomes, including characteristics of both prospective workers and prospective employers. To answer that question, we need to examine how the different groups in the minimum wage states, those that raised their minimum wages during the years 1998-2005, compare with counterparts in the non-minimum wage states, states that did not. Racially, they are less white, and, among young adults, more Hispanic. In the analysis presented in Tables 6 and 7, the minimum wage has been adjusted by dividing through by the previous year's value of the average wage for the lower half of each demographic group's wage distribution. Evidence of a negative employment affect in Table 6 is even weaker than in Table 5. Between the last time the federal minimum wage was increased, in September 1997, and the end of 2005, 17 states and the District of Columbia raised their own minimum wages a grand total of 47 times. Examination of several demographic groups for which wages and employment are thought to be sensitive to minimum wages found some positive effect on wages and scant effect on either employment or labor supply.
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