In his State of the Union address, President Obama called on Congress to act on a proposal to increase the minimum wage to $10.10 per hour. Raising wages, he said, is "Good for the economy; it's good for America."
To contribute to the discussion the Upjohn Institute is providing—prior to publication this spring—the findings of an exhaustive new study of the wage, employment, and poverty impacts of the minimum wage. Supported by the Upjohn Institute, Dale Belman and Paul Wolfson, authors of the forthcoming book titled What Does the Minimum Wage Do?
(Upjohn Press), performed a meta-analysis on scores of published studies examining the effects of the minimum wage. The studies were based on data mostly from the United States but also from other countries. The authors’ comprehensive analytical efforts allow them to conclude the following:
What Does the Minimum Wage Do?
Moderate increases in the minimum wage, characteristic of the United States over the last half of the twentieth century, have the effect that was intended by original supporters of the legislation; increasing the minimum wage substantially increases the earnings of those at the bottom of the income distribution and reduces wage inequality.
Negative effects on employment resulting from increases in the minimum wage were too small to be statistically detectable in the meta-analsis. The authors conclude thatemployment effects are too modest to have meaningful consequences for public policy in the dynamically changing labor markets of the United States.
Evidence of positive spillover effects on the wages of those earning slightly more than the new minimum wage is mixed, but generally supports their existence, particularly for women.
The bottom line for Belman and Wolfson is that the minimum wage should be seen as one of a set of public policy tools aimed at improving the standard of living of the less well-off, and moderate increases in the minimum wage would likely aid low income individuals and families with acceptable costs to the nation.
is to be published in the spring of 2014. Click here
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