June 17, 2018
Decades of economic research and policymaking have focused on minimum wages, tax credits, and welfare programs as essential tools to improve the lives of struggling and disadvantaged Americans. In this new study, economists David Neumark and Brittany Bass of the … Continue reading
June 1, 2018
Perhaps the most-popular argument for eliminating the tip credit is the claim that states without one have half the rate of restaurant sexual harassment as those states that do. Earlier this year, the Employment Policies Institute released a report-length examination … Continue reading
May 21, 2018
New Jersey Democratic Gov. Phil Murphy has his sights set on gradually raising the state’s minimum wage from $8.60 to $15 an hour. But many small business owners fear that customers will question whether it’s worth paying more for virtually the same … Continue reading
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. Washington and Massachusetts currently have the highest state minimum wages in the country at $11 per hour, and Emeryville, CA, currently has the highest city minimum wage at $15.20 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.