2007 EPI Minimum Wage Survey of Labor Economists

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The 2007 Minimum Wage Survey was conducted by the University of New Hampshire Survey Center for the Employment Policies Institute from January to April, 2007. A similar survey on Living Wages was conducted in 2000. Two hundred eighty (280) labor economists in the United States completed mail questionnaires for the survey. A list of economists was obtained from the American Economic Association (AEA) and consisted of all AEA members who indicated that their primary or secondary area of expertise is labor economics. For a more complete description of the survey methodology, please see the attached Technical Report.

The major findings of this survey include :

Almost three-fourths of labor economists (73%) believe that a mandated minimum wage increase set at 150% of the current wage would result in employment losses. Similarly, more than two-thirds of labor economists (68%) believe a mandated minimum wage would result in employers hiring more applicants with greater skills, and nearly one-third (31%) believe there would be no change in hiring practices.

Nearly half of labor economists (49%) believe a mandated minimum wage set at 150% of the current wage would lead to no change in poverty rates, 32% believe it will reduce poverty rates and 19% believe it will increase poverty rates.

Labor economists were asked to rate the efficiency of three proposed policies which address the income needs of poor families: a higher minimum wage, the Earned Income Tax Credit, and general welfare supports. Of these three options, the Earned Income Tax Credit is rated most efficient followed by general welfare supports. A higher minimum wage is judged least efficient. Economists’ ratings of the efficiency of welfare and the EITC did not change between 2000 and 2007; the minimum wage question was not asked in 2000.

More than half of labor economists (53%) rated the Earned Income Tax Credit as very efficient, another 42% believe it is somewhat efficient, and only 5% think it is not at all efficient.

General welfare grants are rated very efficient by 12% of labor economists, 67% believe they are somewhat efficient, and 21% think they are not at all efficient.

Only 6% of labor economists believe a higher minimum wage is a very efficient way to address the income needs of poor families, 39% think it is somewhat efficient, and 55% think it is not at all efficient.

Not surprisingly, when asked which of these three best addresses the income needs of poor families, 70% said an expanded EITC, 21% said general welfare supports, and only 9% said a higher minimum wage.

Labor economists were asked to estimate the effect a higher minimum wage (150% of the current level) and an expanded EITC would have on employment. Of these two options, economists believe an expanded EITC would lead to employment gains, and that a higher minimum wage would result in employment losses.

Nearly two-thirds of labor economists (64%) say an EITC would lead to employment gains, another 34% believe it would lead to no change in employment, and only 2% believe there would be employment losses.

In contrast, only 6% of labor economists believe an increased minimum wage would lead to employment gains, 29% believe it would lead to no change in employment, and 65% believe there would be employment losses.

Labor economists were asked what type of effect minimum wage mandates would have if they were set at the local or state level rather than at the national level. Of these two scenarios, economists predict larger minimum wage effects when set at the state or local level rather than at the national level.

Nearly half of labor economists (49%) believe minimum wage effects to be larger if set at the state level rather than the national level, 29% believe there is no difference, and 22% believe the effect will be smaller.

The majority of labor economists (61%) believe minimum wage effects will be larger if set at the local level rather than the national level, 18% believe there is no difference, and 21% believe the effect will be smaller.

More than eight in ten labor economists strongly oppose using a family of three as the standard for setting hourly minimum wage levels. Economists are also strongly opposed to using a family of four as the standard for setting minimum wage levels. There was no change in economists’ opinion on this issue between 2000 and 2007.