5 Things You Didn’t Know About the Minimum Wage
- For every 10 percent increase in the minimum wage, teen employment at small businesses is estimated to decrease by 4.6 to 9.0 percent.1
- According to the U.S. Bureau of Labor Statistics, teen unemployment averaged a record high 24.3 percent in 2009.
- For every 10 percent increase in the minimum wage, estimates show employment may fall as much as 6.6 percent for young black and Hispanic teens ages 16 to 19.2
- African American teen unemployment averaged 39.5 percent in 2009, which is more than four times the national unemployment average and 26 percent higher than last year.
- According to recent U.S. Census data, only 16.5 percent of minimum wage recipients are raising a family on the minimum wage. The remaining 83.5 percent are teenagers living with working parents, adults living alone, or dual-earner married couples.3
- Raising the minimum wage is an ineffective tool to fight poverty. Programs like the Earned Income Tax Credit are far better at helping low-income Americans.4
- The average annual family income of those earning the minimum wage in 2009 is over $48,000.2
- One study found that only 10.5 percent of the beneficiaries of then-candidate Obama’s proposal to raise the minimum wage to $9.50 would come from poor families.4
- Economists at the University of California-Irvine and the Federal Reserve reviewed the economic evidence and found a majority in support of “the view that minimum wages reduce the employment of low-wage workers.”5
- 27 million Americans lack even the basic skills needed to fill out a job application.6 Minimum wage increases make it more difficult to hire and train less-skilled individuals like this.
Between July 2007 and July 2009, the federal minimum wage increased by 40 percent. A new study from Ball State University found there were 550,000 fewer part-time jobs as a result of this increase.
Federal policy makers allowed the wage hike to go through despite decades of research showing that minimum wage hikes take a sledgehammer to the entry-level job market. As employers are faced with higher labor costs, they hire workers who have more work experience or higher skill levels. This leaves unskilled applicants without a job, and without the invisible curriculum that comes with a first job experience.
1 Sabia, Joseph J. (2006) The Effect of Minimum Wage Increases on Retail and Small Business Employment. Washington, DC: The Employment Policies Institute.
2 Neumark, David. (2007) Minimum Wage Effects in the Post-Welfare Reform Era. Washington, DC: The Employment Policies Institute.
3 Bureau of Labor Statistics. (2009) “The Employment Situation: June 2009” and EPI’s internal analysis of the Outgoing Rotation group Data Files from the Current Population Survey, June 2008-May 2009.
4 Sabia, Joseph J. and Burkhauser, Richard. (2008) Minimum Wages and Poverty: Will the Obama Proposal Help the Working Poor? Washington, DC: The Employment Policies Institute.
5 Neumark, David and Wascher, William. (2008) Minimum Wages.The MIT Press; Cambridge, MA. PP. 104-105.
6 National Assessment of Adult Literacy. (2003). National Center for Education Statistics; US Department of Education.
Press Releases / Op-Eds
New Survey of Seattle Businesses: $15 Wage Hike Will Raise Prices, Reduce Job Opportunities, and Shut Doors
June 24, 2014
Washington, D.C. — Today the Employment Policies Institute (EPI) released a new survey of Seattle businesses gauging how they plan to adapt to the city’s minimum wage increase to $15.00 – the highest in the country. Of those surveyed, ...
June 16, 2014
Washington, D.C. – A new television commercial will begin airing this week that advocates against raising the minimum wage to protect entry-level jobs for New Yorkers most in need of employment, the Employment Policies Institute (EPI) announced on Monday. ...
By Dr. Joseph Sabia • January 28, 2014
In his 2013 State of the Union address, President Obama called for an increase in the federal minimum wage to $9 an hour. The following month, Senator Tom Harkin (D-IA) and Representative George Miller (D-CA) introduced a bill to ...
By David Macpherson - Trinity University, William Even - Miami University • October 14, 2013
This fall, New Jersey voters will decide whether to alter the state Constitution to raise the minimum wage to $8.25 and then put it on autopilot to rise in future years. The debate in the state has focused on ...
Letters to the Editor
By Michael Saltsman • July 22, 2013 • The Milwaukee Journal-Sentinel
U.S. Rep. Gwen Moore's heart may be in the right place on the minimum wage, but the evidence is clear that minimum wage hikes actually harm the people they're supposed to help. ("Minimum wage raise urged," July 16). The economics ...
By Michael Saltsman • May 30, 2013 • Los Angeles Daily News
RE: "Time to raise the minimum wage?" (May 19): Economist Sylvia Allegretto claimed there is no link between minimum-wage hikes and job losses. What she didn't mention is that her research findings were disproven. Economists at the University of California, ...