Contemporary Quotes on Minimum and Living Wage

"I also have tried very hard not just to generate jobs but to help people who are working hard for less. That's why we expanded the earned-income tax credit, and I've asked Congress to expand it again. ... And that's why, with bipartisan support in 1996, we raised the minimum wage to $5.15 an hour, over 2 years. And now it's time to do it again, to $6.15 an hour.

We have bipartisan support again in Congress, but once again, the Republican leadership is trying to stop us. They know they can't win on the facts. Back in 1996—listen to what was said the last time we tried to raise the minimum wage. In 1996, Republican leaders said that a higher minimum wage, and I quote, 'was a job killer cloaked in kindness.' They warned that it would throw young minorities out of work and lead to—listen to this—a juvenile crime wave of epic proportions.

Time has not been kind to their predictions. ... Today I release a report from the National Economic Council that puts to rest any of the lingering myths about the minimum wage. Since the minimum wage was raised in 1996, our economy has created over 10 million new jobs. The unemployment rate is at its lowest point in 30 years. The employment of minority youth has gone up. Juvenile crime has gone down. We now have the lowest poverty rates in 20 years and the lowest African-American and Hispanic unemployment rates ever recorded. We've cut the welfare rolls in half. And, thanks in part to the minimum wage increase, millions have moved from welfare to work, and incomes for even the poorest Americans are rising for the first time in decades."

President William J. Clinton
The American Presidency Project
March 8, 2000
Library Topic

"Living wage advocates often point to a study by economists David Card and Alan Krueger, which claims that raising the minimum wage does not reduce employment. This research became prominent during the Clinton years, in part because Krueger was once chief economist in Clinton's Labor Department.

Although Card and Krueger are reputable economists, equally reputable economists have attacked their data, methods, and results.

Meanwhile, most research on the minimum wage finds that it reduces employment. Emphasizing the Card-Krueger evidence is like a doctor prescribing a drug relying on a single controversial study that finds no adverse side effects, while ignoring the many reports of debilitating results."

N. Gregory Mankiw
Boston Globe
June 24, 2001
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"At the time the minimum wage legislation was enacted, the nation had been in the Great Depression for nearly a decade; 1938 was the eighth consecutive year of double-digit unemployment. Although there were several ostensible objectives behind the legislative impetus to enact the minimum wage law, first and foremost it was an attempt to reduce poverty in the United States. Using current federal poverty definitions, about one-half of the American population was in poverty at the time the legislation was implemented. ... By increasing the wages of some of the nation’s working poor, it was expected that some individuals would be lifted out of poverty."

Richard K. Vedder Ph.D.
Lowell E. Gallaway Ph.D.
Employment Policies Institute
June 2001
Library Topic

"In the modern world in which laborers often receive fringe benefits from employment as well as on-the-job training, the imposition of a minimum wage can lead to reductions in these nonwage expenses of employers. ... If an employer is forced to pay a wage higher than what market conditions dictate, fringe benefit payments not subject to the minimum wage law may be reduced. Such reductions could include ending or reducing health insurance payments, or forcing the worker to pay for parking. Although it pays to train workers whose contributions to the firm equal or exceed their wage, when that is no longer the case (e.g., when the minimum wage exceeds the marginal product of labor), the firm may abandon both the hiring of new workers or the providing of training for them that might be transferable to other jobs."

Richard K. Vedder Ph.D.
Lowell E. Gallaway Ph.D.
Employment Policies Institute
June 2001
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"However defined, the American evidence is clear that raising minimum wages does not reduce poverty. That holds true using different definitions of poverty; evaluating different age, racial and gender groups within the broader population; using different geographic areas, using different samples (e.g., cross-sectional vs. time-series data) and using different independent variables to control for other factors that impact poverty. Many things affect poverty, such as the magnitude of unemployment in particular, but also the overall level of income, the prevalence of transfer payments, the existence of single-parent families and so forth. Public policy would be better directed toward changing these other variables rather than the minimum wage if the goal is to reduce the amount of poverty in the United States."

Richard K. Vedder Ph.D.
Lowell E. Gallaway Ph.D.
Employment Policies Institute
June 2001
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"The study concludes that a living wage one and a half times the minimum wage would raise the average wages of the lowest tenth of income earners by 3.5 percent. That is, it would increase total earnings for the group and, as a result, slightly decrease the likelihood of families having an income below the poverty line.

That is hardly a ringing success. After all, it simply means that the unintended consequences of living wage laws, such as increased unemployment of low-wage workers, are not so large that they totally undermine the intent of the policy, so that there are actually some gains, on average, to low-income earners. "

Gary Galles
Ludwig von Mises Institute
March 27, 2002
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"This case is in one respect very much like public housing. In both, the people who are helped are visible – the people whose wages are raised; the people who occupy the publicly built units. The people who are hurt are anonymous and their problem is not clearly connected to its cause: the people who join the ranks of the unemployed or, more likely, are never employed in particular activities because of the existence of the minimum wage and are driven to even less remunerative activities or to the relief rolls; the people who are pressed ever closer together in the spreading slums that seem to be rather a sign of the need for more public housing than a consequence of the existing public housing.

A large part of the support for minimum wage laws comes not from disinterested men of good will but from interested parties. For example, northern trade unions and northern firms threatened by southern competition favor minimum wage laws to reduce the competition from the South."

Milton Friedman
University of Chicago Press
2002
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"This is bad news for cities. The living wage poses a big threat to their economic health, because the costs and restrictions it imposes on the private sector will destroy jobs —especially low-wage jobs — and send businesses fleeing to other locales. Worse still, the living-wage movement’s agenda doesn’t end with forcing private employers to increase wages. It includes opposing privatization schemes, strong-arming companies into accepting employee unions, and other economic policies equally harmful to urban health."

Steven Malanga
The New York Sun
January 30, 2003
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"Decades of research have shown that the minimum wage harms the least-skilled workers from poor families while heavily benefiting young workers from middle-income households. Several studies critical of the living wage come to similar conclusions. The main beneficiaries of the living wage are public-sector unionized employees because of the reduced incentives for local governments to contract out work. Instead of exploiting grievances of the marginally employed against 'greedy' employers, advocates for the poor should focus their energies on building the skills of the poor."

Carl Horowitz
Cato Policy Analysis, No. 493
Cato Institute
October 21, 2003
Library Topic

"According to Horowitz, living wage laws as of 2002 directly affected only 1 percent or so of employees in the communities that have enacted such laws. Those who benefit the most are young workers and public-sector unionized employees. Living wage laws not only reduce the incentives for local governments to contract work out, but they also increase the bargaining power of the employee unions."

Cato Institute
October 21, 2003
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"The latest verbal coup of the left is the phrase 'a living wage.' Who is so hard-hearted or mean-spirited that they do not want people to be able to make enough money to live on?  Unfortunately, the effort and talent that the left puts into coining great phrases is seldom put into facts or analysis."

Thomas Sowell
Townhall
November 5, 2003
Library Topic

"Remuneration is the most important means for achieving justice in work relationships. The 'just wage is the legitimate fruit of work'. They commit grave injustice who refuse to pay a just wage or who do not give it in due time and in proportion to the work done (cf. Lv 19:13; Dt 24:14-15; Jas 5:4). A salary is the instrument that permits the labourer to gain access to the goods of the earth. 'Remuneration for labour is to be such that man may be furnished the means to cultivate worthily his own material, social, cultural, and spiritual life and that of his dependents, in view of the function and productiveness of each one, the conditions of the factory or workshop, and the common good'. The simple agreement between employee and employer with regard to the amount of pay to be received is not sufficient for the agreed-upon salary to qualify as a 'just wage', because a just wage 'must not be below the level of subsistence' of the worker: natural justice precedes and is above the freedom of the contract.

The economic well-being of a country is not measured exclusively by the quantity of goods it produces but also by taking into account the manner in which they are produced and the level of equity in the distribution of income, which should allow everyone access to what is necessary for their personal development and perfection. An equitable distribution of income is to be sought on the basis of criteria not merely of commutative justice but also of social justice that is, considering, beyond the objective value of the work rendered, the human dignity of the subjects who perform it. Authentic economic well-being is pursued also by means of suitable social policies for the redistribution of income which, taking general conditions into account, look at merit as well as at the need of each citizen."

Pontifical Council for Justice and Peace
2004
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Library Topic: Social Justice

"But what of the able-bodied worker who 'can’t find a job'? This situation cannot obtain. In those cases, of course, where a worker insists on a certain type of job or a certain minimum wage rate, he may well remain 'unemployed.' But he does so only of his own volition and on his own responsibility. ... If a worker can withdraw from the labor market by insisting on a certain type of work or location of work, he can also withdraw by insisting on a certain minimum wage payment."

Library Topic

"The crucial point is that the unions insist on a minimum wage rate higher than what would be achieved for the given labor factor without the union. By doing so, ... they necessarily cut the number of men whom the employer can hire. Ergo, the consequence of their policy is to restrict the supply of labor, while at the same time they can piously maintain that they are inclusive and democratic, in contrast to the snobbish 'aristocrats' of craft unionism."

Library Topic

"The principles of maximum and minimum price control apply to any prices, whatever they may be: of consumers’ goods, capital goods, land or labor services, or, as we have seen, the 'price' of money in terms of other goods. They apply, for example, to minimum wage laws. When a minimum wage law is effective, i.e., where it imposes a wage above the market value of a grade of labor (above the laborer’s discounted marginal value product), the supply of labor services exceeds the demand, and the 'unsold surplus' of labor services means involuntary mass unemployment. Selective, as opposed to general, minimum wage rates, create unemployment in particular industries and tend to perpetuate these pockets by attracting labor to the higher rates. Labor is eventually forced to enter less remunerative, less value-productive lines. This analysis applies whether the minimum wage is imposed by the State or by a labor union."

Library Topic

"Thus, one effect of minimum wages is that of discriminating against the employment of low-skilled workers.

For the most part, teenagers dominate the low-skilled worker category. They lack the maturity, skills and experience of adults. Black teenagers not only share those characteristics, but they are additionally burdened by grossly fraudulent education, making them even lower skilled.

Bureau of Labor Statistics unemployment data confirms the economic prediction about minimum wage effects. Currently, the teen unemployment rate is 16 percent for whites and 32 percent for blacks. In 1948, the unemployment rate for black teens (16-17) was lower (9.4 percent) than white teens (10.2 percent). Plus, black teens were more active in the labor force.

How might we explain that? How about arguing that there was less racial discrimination in 1948, or back then black teens were more highly educated than white teens? Of course, such arguments would be nonsense. The fact of the matter is that while there was a minimum wage of 40 cents an hour prior to 1948, it had been essentially repealed by the post-World War II inflation; however, with successive increases in the minimum wage, black teen unemployment rose relative to white teens to where it has become permanently double that of white teens.

If the minimum wage law has these effects, then how does it pass political muster?"

Walter E. Williams
Capitalism Magazine
March 3, 2005
Library Topic

"The first federal minimum wage law, the Davis-Bacon Act of 1931, was passed in part explicitly to prevent black construction workers from 'taking jobs' from white construction workers by working for lower wages. It was not meant to protect black workers from 'exploitation' but to protect white workers from competition.

Even aside from a racial context, minimum wage laws in countries around the world protect higher-paid workers from the competition of lower paid workers.

Often the higher-paid workers are older, more experienced, more skilled or more unionized. But many goods and services can be produced with either many lower skilled workers or fewer higher skilled workers, as well as with more capital and less labor or vice-versa. Employers' choices depend on the relative costs.

The net economic effect of minimum wage laws is to make less skilled, less experienced, or otherwise less desired workers more expensive -- thereby pricing many of them out of jobs. Large disparities in unemployment rates between the young and the mature, the skilled and the unskilled, and between different racial groups have been common consequences of minimum wage laws."

Thomas Sowell
RealClearPolitics
2005
15
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"The idea that legislators can help low-income workers simply by mandating a pay raise is the height of hubris. While the minimum-wage rhetoric may sound good, the reality is quite different. Forcing employers to pay low-skilled workers a higher than market wage — in the absence of any changes in productivity — will decrease the number of workers hired (the law of demand).

The National Federation of Independent Business estimates that if the federal minimum wage is increased to $6.65 per hour, nearly 217,000 workers would lose their jobs. The long-run consequences would be even more severe, as employers introduced labor-saving equipment and technology."

James A. Dorn
Examiner.com
Cato Institute
July 4, 2006
Library Topic

"Economic freedom, not minimum-wage socialism, is the key to reducing poverty, as China is learning. If legislators really want to help the poor, the best thing they can do is abolish, not increase, the minimum wage.

In America, the majority of low-income earners typically move up the income ladder by improving themselves, not because of the minimum wage."

James A. Dorn
Examiner.com
Cato Institute
July 4, 2006
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"Another area where we can work together is the minimum wage. I support the proposed $2.10 increase in the minimum wage over a 2-year period. I believe we should do it in a way that does not punish the millions of small businesses that are creating most of the new jobs in our country. So I support pairing it with targeted tax and regulatory relief to help these small businesses stay competitive and to help keep our economy growing. I look forward to working with Republicans and Democrats to help both small-business owners and workers, when Congress convenes in January."

President George W. Bush
The American Presidency Project
December 20, 2006
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"In a free society, employers should have the right to hire and fire workers and to pay them wages that are mutually agreed upon, and workers should have the right to freely compete for jobs and, thus, to accept employment at mutually beneficial wage rates. A worker's minimum acceptable hourly wage, of course, will depend on his or her next best alternative employment opportunity and, hence, on the value of his or her productivity in the marketplace.

Arbitrarily increasing the legal minimum wage simply increases the price of labor without changing a worker's skill level or other conditions that lead to low wages. Congress cannot repeal the law of demand by a stroke of the legislative pen. When the real (inflation-adjusted) minimum wage rises above the prevailing market wage for unskilled workers, employers will cut back on hours, reduce benefits, and introduce labor-saving methods of production. This is common sense."

James A. Dorn
Examiner.com
Cato Institute
January 24, 2007
Library Topic

"(a) The Congress finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers

(1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States;

(2) burdens commerce and the free flow of goods in commerce;

(3) constitutes an unfair method of competition in commerce;

(4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and

(5) interferes with the orderly and fair marketing of goods in commerce."

U.S. Department of Labor
May 2011
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"Since the Earned Income Tax Credit lifts nearly 5 million Americans out of poverty each year, I’ll double the number of workers who receive it and triple the benefit for minimum wage workers. And I won’t wait another ten years to raise the minimum wage – I’ll guarantee that it keeps pace with inflation every single year so that it’s not just a minimum wage, but a living wage. Because that’s the change that working Americans need."

President Barack Obama
February 13, 2008
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"Such losses are hard to see, but they are widespread. One company closes because it can't afford to pay higher wages. Another decides to produce its product with fewer workers, and another never expands. Perhaps most importantly, there's the business that never opens. The people who were never hired don't complain—they wouldn't know whom to blame—they don't even know that they were harmed. They are the unseen victims."

John Stossel
Reason Magazine
July 30, 2009
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"Ultimately, a living wage in Athens (or anywhere) will actually hurt the poor rather than helping them. It will decrease production, increase counterproductive activity for the least skilled, and increase prices for the entire population. Cities like Athens should encourage work instead, by minimizing regulations on labor and allowing everyone's standard of living to increase with unadulterated production."

Bill Barnes
Ludwig von Mises Institute
October 15, 2009
Library Topic

"The most common concern I hear when discussing the possibility of eliminating the minimum wage is that companies will be able to get together and gang up on their employees, forcing them to accept wages of nearly nothing. This sounds plausible, but it leaves out two key points: employees are not 'forced' to work at a specific place, and competition between businesses will automatically lead to different wages (not just between companies, but within the company as well)."

Charlie Virgo
Mises Daily
Ludwig von Mises Institute
May 24, 2011
Library Topic

"Although it's not as common, many people are also concerned that eliminating the minimum wage, currently at $7.25 on the federal level, would drop wages across the board by an equal amount. Someone making $20/hour, the theory goes, will quickly see their wage drop to $12.75. The error in this thinking, however, is that the minimum wage is not a price floor for all wages — just for those that would be less in the absence of regulation. A person making $20/hour won't see a change in his or her pay if the minimum wage is decreased because the company isn't basing his or her wage on the minimum wage to begin with. Job descriptions don't list salaries of '$10 higher than minimum wage,' for example.

The only salaries that would be affected would be those that are already overpriced, namely jobs utilizing unskilled labor. Just as not all products are worth paying $7.25 to receive, not all jobs are worth paying $7.25 to have someone complete."

Charlie Virgo
Mises Daily
Ludwig von Mises Institute
May 24, 2011
Library Topic

"The final argument, that citizens should not be treated so poorly as to receive a wage of $7.24, is not based on economics but on the moral standing of those in favor of minimum wages. They believe that a resident of the most powerful country in the world should not have to worry about living comfortably. While I agree that basic services should be provided to those in need, who administers these services is a major question. Those that are pro–minimum wage believe that the government should be the one granting assistance, in the form of artificial wage rates. Governments are hardly the only ones able to aid the poor and destitute."

Charlie Virgo
Mises Daily
Ludwig von Mises Institute
May 24, 2011
Library Topic

"Any employer who violates the provisions of section 206 [Minimum Wage] or section 207 [Maximum Hours] of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages."

U.S. Department of Labor
May 2011
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An article about the living well and its potential to kill jobs because of its strict requirements.

"Moreover, as employers are forced to pay low-skilled workers a higher wage, they are less likely to hire such workers. Citing a study by Michigan State University's David Neumark, Horowitz writes that a living wage set at 50 percent above the minimum wage increases the average wage for workers in the bottom tenth on the pay scale by 3.5 percent. However, the same wage increase reduces the...

"The media are never better at displaying their economic illiteracy than when they report on the minimum wage. ... They assume that if politicians declare that workers should get a raise, they will actually get it. But the idea that government can increase wages by decree with only good consequences rests on a serious economic fallacy: that employers set wages arbitrarily. If wages are very...

Passage by the House of Representatives of the Fair Minimum Wage Act of 2007, as part of the Democrats' first 100-hour agenda for 'A New Direction for America,' was a step in the wrong direction.

Alan Reynolds takes out the U.S. Statistical Abstract and points out only 0.4 percent of the workforce is making the minimum wage. A great many more are making less than the minimum wage due to an array of loopholes that exempt different types and sizes of businesses.

"The measure has sparked strong opposition from business leaders, who say it would deter retailers from moving into the city. But it has drawn support from labor activists, who say many workers do not earn enough money to support their families."

This article is meant to address the gaping holes in Spurlock's arguments as well as the problems in the arguments that I often hear when I explain how unnecessary our minimum-wage laws are.

"If Santa Fe is anything like other resort towns here in the West, it is incredibly difficult to build anything in the town since the existing residents don’t want any high density housing for the workers mucking up their perfectly planned and controlled community. Thus, the city council’s approved zoning and building requirements drive up the cost of living and it becomes impossible for the...

Liberal economist and Nobel prize winner Joseph Stiglitz was in Hong Kong Thursday and gave his support to the recently passed minimum wage, a first for the supposed bastion of market freedom.

Prior to the decade of the 1930s, the wages of inexperienced and unskilled labor were determined by supply and demand. There was no federal minimum wage law and labor unions did not usually organize inexperienced and unskilled workers.

Just because lawmakers raise the minimum wage, doesn't mean it won't come back for debate a few years down the road. The reason is that the minimum wage is not automatically adjusted for inflation. Every year it becomes less valuable.

I've always thought that the minimum wage was perfect liberal economics, in the sense that it perfectly encapsulates the liberal philosophy.

"And yet there is a problem with markets: They are absolutely and relentlessly amoral. Labor, in a market system, is just another commodity; the wage a man or woman can command has nothing to do with how much he or she needs to make to support a family or to feel part of the broader society. Some conservatives have managed to convince themselves that this poses no...

On the surface, it would seem that raising the minimum wage paid to workers would help them out. But statistics tell a different story ....

One widely accepted policy — the minimum wage — is appropriately reflected in Karl Marx's dictum, 'To each according to his needs, from each according to his ability.'

The idea that minimum wage legislation is an anti-poverty tool is simply sheer nonsense.

Here are some numbers related to minimum wage in America.

"Minimum-wage earners in 31 states and the District of Columbia can soon expect slightly bigger paychecks thanks to the third and final installment of a federal rate hike that raises the wage floor from $6.55 an hour to $7.25 an hour effective Friday (July 24)."

"If we wish to increase the incomes of the working poor (which we might well wish to do) we are forced to consider after market methods of doing so, not interventions directly into the market. That might include benefits, tax credits, all sorts of things really: but perhaps the best and most obvious would be to stop taxing them so damn much in the first place."

In three recent pieces on this page, James Glassman has inveighed against the proposal to increase the minimum wage from $4.25 to $5.15. Unfortunately, his arguments (and those of other opponents) have been based on outdated information and a simplistic analysis of how the low-wage labor market functions.

"Councilman Ricky Burgess introduced the legislation Tuesday that would implement an amended version of a 2002 living wage ordinance that guarantees city employees earn a high enough hourly rate to support their families if they are the sole provider...

A press release describing the findings of two recent studies that examined the economic impact of the minimum wage, as presented by the authors. "An increase in the minimum wage could help bolster the sluggish economic recovery, according to two new, groundbreaking studies."

An article covering the projected costs of the "living wage."

"There are plenty of people who can tell you the 'benefits' of a living wage. Of course, these benefits are very shallow and short-term. A deeper economic and social analysis demonstrates the appalling costs of such regulation."

In this piece, Paul Krugman reviews a book on the concept of "living wage." Krugman makes some interesting statements about the living wage, most notably his admission that the push for a living wage is largely a political tactic.

"The heat under the 'living wage' debate has been turned up a notch. The Public Policy Institute of California has just published an extensive study by Michigan State economist David Neumark, the main conclusion of which is that, despite causing increased unemployment among the lowest-wage workers, 'living wage laws raise the wages of low-wage workers.'"

The minimum wage law is based on the assumption that some minimum hourly rate of pay should be legislated so that people will have a minimum income to support themselves and their families.

Congress can easily mandate higher wages, but they cannot mandate higher worker productivity or that employers hire a particular worker in the first place.

The minimum wage is a classic example of a good intention and a bad idea. The idea behind minimum wage legislation is that government, by simple decree, can increase the earning power of all marginal workers.

In 1987, the New York Times editorial board penned this piece on minimum wage. According to this piece, raising the minimum wage level prices the poor out of the labor market.

Just as a worker will only offer his labor time for a wage he finds beneficial, so an employer will only be willing to pay workers a wage that permits him to earn a profit. The higher the wage, the fewer workers the employer will employ.

I wasn’t in the mood Friday to celebrate the 73rd birthday of the federal minimum wage, created under the Fair Labor Standards Act of 1938. Looking at youth unemployment numbers can be a little depressing.

It seems that more and more Serious People (and Fox News) are rallying around the idea that if Obama really wants to create jobs, he should cut the minimum wage.

"Over the last decade, a savvy left-wing political movement, supported by radical economic groups, liberal foundations, and urban activists, has lobbied for a government-guaranteed 'living wage' for low-income workers considerably higher than the current minimum wage. The movement has scored enormous success: 80 cities nationwide, from New York to San Francisco, now have living-wage...

Chart or Graph

A closer look at workers who make the minimum wage illustrates why LWOs are ineffective at relieving poverty. According to the Bureau of Labor Statistics, minimum wage workers are largely unmarried workers who tend to be young. About half the workers earning minimum wage are under age 25.

There are two factors affecting the ability of a minimum wage increase to reduce poverty: poor target efficiency and job reductions.

Table 3 shows the demographic characteristics of private sector workers (including federal contract workers) earning less than a living wage. The table shows that these workers are mostly female, adult, full-time workers, and they are disproportionately minorities.

Estimates of the characteristics of those workers who would be affected if the minimum wage were raised to $7.00 under the Fair Minimum Wage Act of 2004 are shown in Table 1.

Table 1 again shows that, for people inclined to participate in such a survey, going to college is not correlated with economic enlightenment.

The final section of the questionnaire took the minimum wage as a concrete setting to explore people’s thinking about the meaning of 'liberty' and 'coercion.'

Many surveys have put the 'young and unskilled' question to economists outside the United States.

Beginning with the landmark 1976 survey by Kearl et (1979), many surveys have asked economists whether they 'generally agree,' 'agree with provision,' or 'generally disagree' with the statement: 'A minimum wage increases unemployment among young and unskilled workers.' Over time, economists have become less favorable to the statement, as shown in Table 3.

This simple graph shows the direct impact of a minimum wage on the demand for young and unskilled workers.

Because the minimum wage is not indexed, inflation affects the value of tax credits for minimum-wage workers. The effect can be positive or negative.

"Detroit workers under the 'living wage' ordinance must be at least 60% more productive than minimum wage earners to give job providers an economic incentive to employ them."

As figure 1 shows, a parent would need to work full time at wages up to 3.9 times the current federal minimum wage (and up to 3.2 times the new, higher minimum wage for 2009) to afford housing in markets like San Francisco and New York ....

"After accounting for inflation, the current minimum wage is at its lowest level since 1954."

The minimum wage law is an artificial floor on wages that attempts to raise wages of low income earners to more acceptable levels. In imposing a minimum wage that firms must pay for labour, the government is legally assigning a minimum value of wages (P1) as the feel the equilibrium wage rate (P) is too low.

As shown in Figure 1, in the 1950s and 1960s the minimum wage averaged 50% of average hourly earnings. That number decreased to 44% in the 1970s and hovered around 39% in the 1980s and 1990s.

Minimum-wage earners in 31 states and the District of Columbia can soon expect slightly bigger paychecks thanks to the third and final installment of a federal rate hike that raises the wage floor from $6.55 an hour to $7.25 an hour effective Friday (July 24).

Tax credits can provide significant subsidies to minimum-wage workers, particularly those with children.

The graph shows the number of ordinances concerning living wage passed each year from 1994 to 2005.

The federal minimum reached its peak value in 1968, at $9.86 expressed in 2009 dollars, about 37 percent higher than where it stands today.

The magnitude of simulated job losses from the current proposal are much larger than from the last increase, because the last increase affected far fewer workers (see Table 7).

For those who truly care about reducing unemployment, ... the first thing we can do is recognize that a large part of the problem is being driven by the massive spike in youth unemployment, which the data suggests is partly being driven by the minimum wage.

Analysis Report White Paper

"Detroit workers under the 'living wage' ordinance must be at least 60% more productive than minimum wage earners to give job providers an economic incentive to employ them."

"A closer look at workers who make the minimum wage illustrates why LWOs are ineffective at relieving poverty. According to the Bureau of Labor Statistics, minimum wage workers are largely unmarried workers who tend to be young. About half the workers earning minimum wage are under age 25."

"Adam Smith’s outlook still inspires and informs modern sensibilities and argumentation. It is of interest beyond Smith aficionados whether a particular line of modern thought 'fits' Smith."

"For decades, the U.S. Census Bureau has reported that over 30 million Americans were living in 'poverty,' but the bureau’s definition of poverty differs widely from that held by most Americans."

"[T]hat every man should earn a 'family wage' that allows his family to live in reasonable comfort is a desirable social goal."

A simple supply and demand framework is used to analyze changes in the U.S. wage structure from 1963 to 1987.

This study advances proposals to substantially strengthen minimum wage laws and the federal Earned Income Tax Credit (EITC) program in the United States, so that, in combination, they can guarantee decent living standards for all full-time U.S. workers and their families.

"This study looks at the effects of the introduction and subsequent uprating of the minimum wage on the prices of UK goods and services, comparing the prices of goods produced by industries in which UK minimum wage workers make up a substantial share of total costs with the prices of goods and services that make less use of minimum wage labour."

The report relies on an impressive array of empirical evidence showing that, however one views the data, in the United States, state and federal minimum wages have not reduced poverty.

We present results of a December 2008 Zogby International nationwide survey of American adults, with 4,835 respondents. We gauge economic enlightenment based on responses to eight economic questions.

"Economists across the political spectrum have pointed out that for many sweatshop workers the alternatives are much, much worse. In one famous 1993 case U.S. senator Tom Harkin proposed banning imports from countries that employed children in sweatshops. In response a factory in Bangladesh laid off 50,000 children."

"The minimum wage law is an artificial floor on wages that attempts to raise wages of low income earners to more acceptable levels. In imposing a minimum wage that firms must pay for labour, the government is legally assigning a minimum value of wages (P1) as the feel the equilibrium wage rate (P) is too low."

"Typically, a living wage is set anywhere from 50 percent to 100 percent above the current federal minimum wage of $5.15 an hour and often higher if employers do not provide health benefits. Thus far, there has been only modest resistance, even from local governments for which the cost of doing business inevitably rises."

The National Employment Law Project has compiled a list of places that have a living wage ordinance in place. The list also details the level(s) of the wage and who is eligible for coverage under the ordinance.

"A large percentage of American families have low incomes, which lead to a host of challenges and disadvantages for both parents and children. In 2006, one out of every three families with children had incomes below twice the federal poverty level (FPL): $40,888 for a family with two adults and two children...."

In this essay, Acs and Turner outline their proposals to enhance low-income families' purchasing power and reduce unusually high housing costs through a package of reforms and policy initiatives that tackle both the income side and expenditure side of family budgets.

An international survey of the minimum wage policies of 48 different countries.

Minimum wage laws set legal minimums for the hourly wages paid to certain groups of workers. In the United States, amendments to the Fair Labor Standards Act have increased the federal minimum wage from $.25 per hour in 1938 to $5.15 in 1997.

"On April 1, 1992, New Jersey's minimum wage rose from $4.25 to $5.05 per hour. To evaluate the impact of the law we surveyed 410 fast-food restaurants in New Jersey and eastern Pennsylvania before and after the rise."

"In this paper we ... analyz[e] administrative employment data from a new representative sample of fast-food employers in New Jersey and Pennsylvania."

We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s.

Attempts to raise the minimum wage often focus on the purported poverty-alleviating results of these policies. Economic research, however, has found little connection between changes in poverty and increases in the minimum wage.

Full-time workers who put in a full day’s work should receive enough wages to purchase the goods and services necessary to meet their most basic needs. The federal minimum wage, originally passed as part of the Fair Labor Standards Act, was established to ensure that low-income workers earn sufficient wages.

The city of New York hired Charles River Associates to study the impact of a proposed living wage bill in NYC that would require a wage of $10.00/hr with health benefits and $11.50 without.

"In October 2006, the Economic Policy Institute released a 'Raise the Minimum Wage' statement signed by more than 650 individuals. Using an open-ended, non-anonymous questionnaire, we asked the signatories to explain their thinking on the issue."

A criticism of the methodology used by Charles River Associates in their May 9, 2011 impact study on a proposed living wage bill.

"This study, by Dr. Aaron Yelowitz of the University of Kentucky, utilizes government collected data to examine the labor market effects of Santa Fe’s living wage increase. Dr. Yelowitz finds that the living wage in Santa Fe significantly increased unemployment and decreased hours worked for those who were able to keep their job."

This analysis shows that increasing tax credits enough to substitute for raising minimum wage is probably infeasible because of both the cost and the high marginal tax rates required.

"The modern living wage movement was born in Baltimore in 1994, when the city passed an ordinance requiring firms to pay employees a rate above the minimum wage while working on city contracts. …[O]ver 120 communities have followed suit, some setting wage floors more than twice the federal minimum wage, and some requiring various benefits."

"Over four decades of empirical studies leave no doubt that increases in the minimum wage do reduce employment to some extent. Yet by most counts, the number of lost jobs is trivial in the aggregate. Only for teenagers are statistically significant negative effects on employment consistently observed."

"Although arguments for and against the minimum wage are the same today as when the Fair Labor Standards Act was passed forty years ago, they are now accompanied by more sophisticated approaches to the measurement of the law’s impact. Moreover, the increase in minimum wage coverage makes the issue more important."

"The authors' results [confirm] the theoretical agreements and offers evidence for increasing minimum wage elasticity, especially in the case of subjects defined as immigrants and teenagers."

"The number of cities, counties, and school districts with living wage ordinances across the United States has swelled to nearly 100."

This paper provides evidence on a wide set of margins along which labor markets can adjust in response to increases in the minimum wage, including wages, hours, employment, and ultimately labor income, representing the central margins of adjustment that impact the economic well-being of workers potentially affected by minimum wage increases.

"Pressure on federal agencies to reduce the size of their workforce has created incentives for contracting for goods and services to private businesses. Most of the workers employed by these private businesses do not enjoy wages and benefits comparable to federal workers."

Noting that proponents of minimum wage increases generally cite single mothers as beneficiaries of the policy, this paper sets out to present data on whether or not this assumption is true. According to Sabia's findings, increases in minimum wage standards...

We find no evidence indicating that minimum wages reduce the average hours of training of trained employees, and little to suggest that minimum wages reduce the percentage of workers receiving training.

Henderson outlines six negative effects of the minimum wage, including unemployment, teen dropouts, reduced competition, and harm to the poor.

"In the past few years, though, as the federal minimum wage has remained fixed at $5.15 and the cost of living (specifically housing) has risen drastically in many regions, similar campaigns have produced so many victories (currently, 134) that Kern speaks collectively of 'a widespread living-wage movement.'"

Burkhauser and Sabia, professors of economics at Cornell University, find that the majority of the beneficiaries of a minimum wage hike are not in poverty, a fact which makes the minimum wage highly inefficient and often an ineffective means of combating poverty.

"The ineffectiveness of a minimum wage in Germany is mainly due to the existing system of means-tested income support."

Video/Podcast/Media

In this podcast, economist Peter Van Doren discusses low-skill workers and the minimum wage. According to Van Doren, many of those working for minimum wage are often teenagers living in middle class homes, not breadwinners living in poverty conditions.

In this podcast, Richard Epstein discusses the difficulties that result because of the minimum wage. Epstein believes that allowing the government to regulate the minimum wage "causes public harm."

As Congress eyes an increase in the minimum wage, experts discuss the implications of such a policy, focusing on how it would affect workers and business as well as other facets that lawmakers must address.

"Bryan Caplan, of George Mason University and blogger at EconLog, talks about his book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies. Caplan argues that democracies work well in giving voters what they want but unfortunately, what voters want isn't particularly wise, especially when it comes to economic policy. He outlines a series of systematic biases we often have on...

Katherine Newman talks with EconTalk host Russ Roberts about Newman's case studies of fast-food workers in Harlem. Newman discusses the evolution of their careers and fortunes over time along with their dreams and successes and failures.

A slideshow depicting several of those workers affected by the Santa Fe "living wage" law.

"People don't like to think that anyone's labor is worth less than the minimum wage. Someone might end up flipping burgers for $5.00 an hour. You might think the minimum wage is a way of paying some sort of dignity premium -- hence language like 'living wage.' People with such good intentions look at the direct beneficiaries of these policies, say, burger flippers now making $7.50 an hour. They pat themselves on the back. But they rarely count the invisible costs: willing human beings who never get hired in the first place."

"Living wage is very different from minimum wage. In this episode we chat about the difference and the feasibility of implementing a living wage policy in the City of Calgary."

"Moderator Bob Liff and a panel of experts debate the highly controversial 'living wage' bill, which is currently being considered in the New York City Council. In May 2010, a major economic revitalization project in the Bronx—at the Kingsbridge Armory—was scuttled by a requirement that its developers and tenants pay a higher hourly wage than the Federal and City minimum. Elected officials and...

"Naturally, workers are concerned about wages, fringe benefits, and job security. Many people feel vulnerable, at the mercy of the 'system.' One response has been the development of a variety of unions, professional organizations, and other groups dedicated to looking after the interests of members. There is evidence that working people have made significant progress over the past two...

"'Newtown' just outside Birmingham is looking dirty, rundown and old. 50 % of its citizens are unemployed, living in grey towerblocks overlooking the urban devastation. The flats are poorly equipped with basic furnishings. All people can do is watch television. As the rich people get richer, the poor get poorer. Chris Pond from the Lay Pay Unit blames poverty and hardship on the Conservative...

In this clip, James Dorn engages in a debate over the pros and cons of the minimum wage. Dorn believes that the U.S. should abolish the federal minimum wage, citing Hong Kong's economic success without one.

Dr. Walter Block and Dr. Boyd Blundell debate the merits and ill-effects of minimum/living wage legislation. Dr. Block opposes it, while Dr. Blundell defends it as necessary.

Milton Friedman discusses the disadvantages and consequences of minimum wage laws, and of social security.

Pedace presents his research concerning the impact of minimum wage on job training and unemployment. He finds that minimum wages cause workers with the least amount of skills to be unemployed for longer periods of time.

An interview with Jeannette Wicks-Lim, who has a proposal to help minimum wage earners with a higher wage rate and a broader, more effective Earned Income Tax Credit.

"In the latest 'Economics 101' video released today by the Center for Freedom and Prosperity Foundation (CFP), Orphe Divounguy, a graduate student from the University of Southampton in England, explains that minimum wage laws hinder the ability of low-skilled workers to get jobs. Entitled 'The Job-Killing Impact of Minimum Wage Laws,' this video examines how the minimum wage hurts young...

In this episode of FPTV, Freedom Party of Ontario leader Paul McKeever explains why increasing the minimum wage would be both immoral and economically hazardous...particularly to employees in Ontario.

"Throughout history, women and men in the labor movement have struggled to gain power in an economy that often seems to work against them, placing profit over people. For the past hundred years, the United States has seen great strides in workers' rights, from the formation of unions, the eight-hour workday, child labor laws, and the creation of a minimum wage. Despite these gains, there...

Walter E Williams and Thomas Sowell discuss how minimum wage is used to protect organized labor from the competition of unskilled labor.

Primary Document

In the interview, Friedman expresses his views on inflation, price controls, and the minimum wage. In regards to the minimum wage, Friedman argues that it actually hurts rather than helps those in the low-income bracket.

An address by President Franklin D. Roosevelt regarding social justice towards workers the year before Congress passed the Fair Labor Standards Act.

"Our nation so richly endowed with natural resources and with a capable and industrious population should be able to devise ways and means of insuring to all our able-bodied working men and women a fair day's pay for a fair day's work. A...

Teddy Roosevelt lays out his platform before the Convention of the National Progressive Party in Chicago, including a call for minimum and living wages.

"Ultimately we desire to use the Government to aid, as far as can safely be done, in helping the industrial tool-users to become in part tool-owners, just as our farmers now are. Ultimately the Government may have to join more...

"The question presented for determination by these appeals is the constitutionality of the Act of September 19, 1918, providing for the fixing of minimum wages for women and children in the District of Columbia. 40 Stat. 960, c. 174."

The court ruled this law unconstitutional.

This economic classic is noted for providing us with terms for and expositions of such key economic ideas as the division of labor, "invisible hand," self-interest as a beneficial force, and freedom of trade.

People who work for the minimum wage often don't get a chance to see the White House. ... And they need a raise, and as you saw, they deserve a raise.

The U.S. Department of Labor annually publishes tables of statistics identifying the demographics of those earning the minimum wage. Over half of those making minimum wage are under 25 years old.

"This document intends to present in a complete and systematic manner, even if by means of an overview, the Church's social teaching, which is the fruit of careful Magisterial reflection and an expression of the Church's constant commitment in fidelity to the grace of salvation wrought in Christ and in loving concern for humanity's destiny. Herein the most relevant theological, philosophical,...

Tulip finds the NAIRU (Non-Accelerating Inflation Rate of Unemployment), the rate of unemployment needed to hold down inflation, is very likely correlated with increases in the minimum wage.

"An English translation of Bastiat's series of short essays in which he tries to correct common misunderstandings about the free market."

Henry Hazlitt's classic primer outlines a straightforward and accessible portrayal of free-market economics. An unshackled market, Hazlitt says, is the only path to "full production".

A bill introduced by MP Christopher Chope to the House of Commons in the U.K. that would allow individuals to voluntarily opt-out of the national minimum wage.

"The Fair Labor Standards Act of 1938, as amended 29 U.S.C. 201, et seq."

The federal law detailing the federal minimum wage.

A proposed amendment to New York City's administrative code that would require a living wage be paid to those employees working on publicly-funded development projects.

"We have not only seen minimum wage and maximum hour provisions prove their worth economically and socially under government auspices in 1933, 1934 and 1935, but the people of this country, by an overwhelming vote, are in favor of having the Congress—this Congress—put a floor below which industrial wages shall not fall, and a ceiling beyond which the hours of industrial labor shall not rise....

The law I have just signed was passed to put people back to work, to let them buy more of the products of farms and factories and start our business at a living rate again.

All but the hopelessly reactionary will agree that to conserve our primary resources of man power, government must have some control over maximum hours, minimum wages, the evil of child labor and the exploitation of unorganized labor.

Today I am pleased to sign H.R. 2710, the 'Fair Labor Standards Amendments of 1989.' This law will increase the minimum wage, in two increments, to $4.25 an hour beginning April 1, 1991.

As we work with Congress in the coming year to chart a new course in Iraq and strengthen our military to meet the challenges of the 21st century, we must also work together to achieve important goals for the American people here at home. This work begins with keeping our economy growing.

Today the minimum wage is 40 cents an hour. Tomorrow the new 75-cent minimum rate goes into effect for the 22 million workers who are protected by the Fair Labor Standards Act, our Federal wage-hour law.

Henry Hazlitt writes a letter to an unknown individual discussing the flaws of Alvin S. Johnson’s (Founder of New York’s New School) arguments about minimum wage, including the effects on immigration.

Mises explained economic phenomena as the outcomes of countless conscious, purposive actions, choices, and preferences of individuals, each of whom was trying as best as he or she could ... to attain ... wants and ... avoid ... consequences.

In 1938, which was 39 years ago, President Roosevelt, in the presence of Senator Jennings Randolph and also in the presence of President George Meany, signed the first Fair Labor Standards Act.

I WANT TO EXPRESS my great satisfaction in signing the bill to increase the minimum wage to a dollar twenty-five cents an hour, and to extend the coverage to three million, six hundred thousand people today who are not covered by this most important piece of national legislation.

"The Living Wage Act of 2006 is Title I of the 'Way to Work Amendment Act of 2006' D.C. Law 16-118 (D.C. Official Code §2-220.01 to .11), which became effective June 8, 2006.   Recipients of new contracts or government assistance (grant, loan or tax increment financing) shall pay affiliated employees and subcontractors who perform services under the contracts or assistance no less...

The minimum rate for most workers-those 30 million previously covered--becomes, today, $1.40 an hour.

Man, Economy and the State provides a sweeping presentation of Austrian economic theory, a reconstruction of many aspects of that theory, a rigorous criticism of alternative schools, and an inspiring look at a science of liberty that concerns nearly everything and should concern everyone.

"This is a habeas corpus case originating in the Supreme Court of New York. Relator was indicted in the County Court of Kings County and sent to jail to await trial upon the charge that, as manager of a laundry, he failed to obey the mandatory order of the state industrial commissioner prescribing minimum wages for women employees."

A testimony before the New Haven Board of Alderman regarding and encouraging legislation that would update New Haven's existing living wage ordinance.

Then-presidential candidate Barack Obama addresses a working class group and discusses the economy and his plans to improve it.

"But through hard times and good, great challenge and great change, the promise of Janesville has been the promise of America – that our prosperity can and must be the tide that lifts every boat; that we rise or fall as one nation; that our economy is...

The federally legislated minimum wage for most American workers has remained static for 6 years despite a number of increases in the cost of living. Raising the minimum wage is now a matter of justice that can no longer be fairly delayed.

I am returning today, without my approval, H.R. 7935, a bill which would make major changes in the Fair Labor Standards Act.

Pope Leo XIII critiques socialism and capitalism, defends property rights, and lays out guidelines for justice in society within the Catholic traditions of human nature and Western Civilization. He places responsibilities upon how labor and employers behave toward each other. Additionally, he outlines the roles of the individual, the family, fathers, the church, society, etc. 

Full...

I want to talk to you today about our young people and what we can do to provide them an all-important opportunity—a summer job.

"The use of taxpayer dollars to promote sustenance and creation of living wage jobs will increase consumer income, decrease levels of poverty and reduce the need for taxpayer funded social programs in other areas; and When City funds are used to contract for services such contracts should demonstrate an effort to promote an employment environment that enhances the general quality of life...

President Clinton outlines his New Covenant and calls for a phased-in, higher minimum wage to partially match the inflation experienced since the previous raise.

"Wages and Benefits under San Francisco laws...

Requires $9.14 per hour with an increase each year on January 1 in an amount corresponding to the prior year’s increase in the Consumer Price Index for urban wage earners for the San Francisco-Oakland-San Jose metropolitan area."

All credible research has come to the same conclusion: raising the minimum wage hurts the poor. It takes away jobs, keeps people on welfare, and encourages high-school students to drop out.

"To revise, codify, and enact without substantive change certain general and permanent laws, related to public buildings, property, and works, as title 40, United States Code, 'Public Buildings, Property, and Works'."

"The scheme of the book, which is displayed in more detail in the Analytical Table of Contents, is as follows. In Part I. it is argued, subject, of course, to a large number of qualifications, that the economic welfare of a community of given size is likely to be greater (1) the larger is the volume of the national dividend, and (2) the larger is the absolute share of...

Although the wage issue may now have been momentary settled, the [minimum wage] act includes other provisions that have been subject to legislation through the years and may again become the focus of legislative consideration.

The enactment of a minimum wage statute in Minnesota makes necessary a present and local discussion of the minimum wage question.

An explanation of the source of wages and a common fallacy concerning that source, based on work by the Duke of Argyll.

This case is generally said to have ended the Lochner era of Supreme Court decisions protecting economic liberties utilizing substantive due process reasoning. It upheld a "statute of the State of Washington ... providing for the establishment of minimum wages for women."

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