July 2001
The living wage movement has been successful in promoting ordinances at the city or county level that would mandate covered businesses to pay wages much higher than the effective state or local minimum wage. At least 60 local governments have adopted some type of living wage mandate legislation. A typical ordinance requires contractors and businesses receiving governmental financial assistance to pay a minimum wage…
June 2001
Congress has been considering a hike in the federal minimum wage from $5.15 to $6.15 an hour or higher. It has been estimated that such a raise would affect over 10 million workers, many of whom are teenagers. A considerable body of research shows that while such increases might raise the wages of some workers, it would also eliminate jobs and work opportunities for others.…
June 2001
This study by economists Richard Vedder and Lowell Gallaway shows convincingly that minimum wages, because of inefficient targeting of the poor and unintended adverse consequences on employment and earnings, are ineffective as an antipoverty device. 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.
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June 2001
During recent minimum wage and living wage debates, it is often heard that there is no job loss attached to a mandated wage increase. A majority of economists question the “no displacement” theory, but many policymakers and their constituents believe this theory to be true. Contrary to popular opinion, mandating a higher minimum wage comes at a cost.
But what if, despite a credible body…
March 2001
Congress may soon be considering a hike in the national minimum wage under dramatically different circumstances then existed in prior debates. The primary changes result from the welfare reform law of 1996. That law, designed to “end welfare as we know it,” imposed enormous burdens on state governors to increase the workforce participation rate for families receiving public assistance. Today each state confronts new and…
December 2000
Public policies designed to help unskilled workers sometimes have unintended consequences. For example, several public assistance programs intended to assist people with few marketable skills actually impose extremely high penalties when earnings rise. That is, as a family’s income increases beyond a certain point, most or all of their benefits from the support program are lost because program “marginal tax rates” are high. That is,…