The Employment Policies Institute (EPI) warned Congress today that a proposed minimum wage hike from $5.15 to $6.65 an hour would worsen conditions in 399 depressed cities and counties as employers replaced the least skilled employees with more highly skilled workers.

A new study released by EPI today identifies 397 counties and cities – each with a population of over 10,000 – that had unemployment rates at or above 9% for last year. In 2001, there were 277 of these high unemployment cities and counties. In 2000, there were 191.

Twenty-six million Americans live in these high unemployment areas that failed to create jobs during the ‘nineties boom and now during the downturn are falling even further behind. The number of Americans living in these high unemployment areas has tripled in just two years.

Kristen Eastlick, Director of Policy Analysis at EPI said:

“The exceptionally high rates of unemployment in these 399 depressed areas demonstrate that the least skilled, most vulnerable workers in the nation are finding it very hard to find jobs at minimum wage at the existing federal minimum of $5.15 an hour.

“EPI research by Dr. Kevin Lang of Boston University analyzes the displacement factor of federally mandated wage increases on less-skilled workers by more highly skilled workers seeking a more competitive wage. ‘The competition from higher quality workers makes low-skilled workers worse off,’ Lang said.

“Raising the federal minimum wage to $6.65 as the number of these depressed areas is increasing, as Senator Edward Kennedy (D-Mass.) proposes, would put more workers in these high unemployment communities at risk of losing their jobs to more highly skilled workers.”