Twelve States Considering Legislation to Raise Or Index Their Minimum Wage

New Research Shows Adult Minimum Wage Earners Aren’t “Just Getting By”
  • Publication Date: March 2011

  • Topics: Minimum Wage

Today, the Employment Policies Institute (EPI) released a new study by nationally-known economist Dr. Bradley R. Schiller, which largely refutes conventional wisdom about adults earning the minimum wage. This research is particularly relevant now, as twelve states across the country consider further increasing their state minimum wage or indexing it to inflation.

Schiller, a professor of economics at the University of Nevada-Reno and author of several bestselling economics textbooks, shows in his new research that—in the vast majority of families with children—an adult who earns the minimum wage is simply providing a small supplement to the income of a higher-earning spouse.

Using data from the National Longitudinal Survey of Youth (NLSY) from the years 1998 to 2006 when the federal minimum was unchanged, Schiller finds that close to half these adults have a spouse earning more than $40,000 a year, and another 27.6 percent have a spouse that earns between $20 and $40 thousand per year. A one-page policy brief describing the study’s findings is available here:http://epionline.org/studies/Schiller_Policy_Brief.pdf

“The disconnect between the claims of wage hike advocates and reality continues to grow,” said Michael Saltsman, research fellow at the Employment Policies Institute. “Earlier research from labor economist Joseph Sabia debunked claims that wage mandates can stimulate the economy, while Schiller’s new research sheds important light on who actually earns the minimum wage.”

This research has important implications: In addition to the well-established negative employment consequences from raising the minimum wage, Schiller’s work demonstrates why states’ efforts to reduce poverty by increasing the minimum wage are destined to fail.

“Census Bureau data show that approximately 40 percent of the beneficiaries from the most recent federal minimum wage increase were teens or others living with a parent or relative,” Saltsman continued. “This new research further demonstrates why wage hikes are poorly targeted at those low-income families who need help most.”

“After decades of research, the only sure thing about minimum wage policy is that it’s cost thousands of less-skilled employees their jobs,” Saltsman concluded. “Policymakers interested in reducing poverty in their state would be wise to focus on proven alternatives like an expansion of the Earned Income Tax Credit.”