Recent Updates

  • South Dakota Think Tank: Minimum Wage Hikes Cost Jobs

    With the exception of hardline minimum wage advocates and their message mavens at PR firm BerlinRosen, most rational onlookers admit that a minimum wage hikes cost jobs. The nonpartisan Congressional Budget Office, the nation’s Chief Financial Officers, the country’s largest … Continue reading

  • Denmark’s Dollar Forty-One Menu

    Proponents of raising the minimum wage often point to Scandinavian countries like Denmark as models for American labor policy. But the devil is in the details. Take this week’s New York Times profile of the comparatively high Danish minimum wage, … Continue reading

  • The Misleading CEO/Employee Pay Gap Lament

    Our recent Wall Street Journal op-ed highlights some of the problems with the notion that the CEO/employee pay gap is too big, a popular lament from union-backed groups who argue that the gap is justification for increasing the minimum wage. … Continue reading

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About the Minimum Wage

The minimum wage is the minimum hourly wage an employer can pay an employee for work. Currently, the federal minimum wage is $7.25 an hour (part of the Fair Labor Standards Act) and some states and cities have raised their minimum wage even higher than that. San Francisco, CA, has the highest minimum wage in the country at $10.55 an hour.

Employees that earn the minimum wage tend to be young, and work in businesses that keep a few cents of each sales dollar after expenses. When the minimum wage goes up, these employers are forced to either pass costs on to consumers in the form of higher prices, or cut costs elsewhere–leading to less full-service and more customer self-service. As a result, fewer hours and jobs are available for less-skilled and less-experienced employees.

Minimum wage increases do not help reduce poverty. Award winning research looked at states that raised their minimum wage between 2003 and 2007 and found no evidence to suggest these higher minimum wages reduced poverty rates. While the few employees who earn a wage increase might benefit from a wage hike, those that lose their job are noticeably worse off.

Employees who start at the minimum wage aren’t stuck there. Research found that the majority of employees who start at the minimum wage, move to a higher wage in their first year on the job.