50 Years of Research on the Minimum Wage
Introduction
For many years it has been a matter of conventional wisdom among economists that the minimum wage causes fewer jobs to exist than would be the case without it. This is simply a matter of price theory, taught in every economics textbook, requiring no elaborate analysis to justify. Were this not the case, there would be no logical reason why the minimum wage could not be set at $10, $100, or $1 million per hour.
The following survey of the academic research on the minimum wage is designed to give nonspecialists a sense of just how isolated the Card, Krueger and Katz studies are. It will also indicate that the minimum wage has wide-ranging negative effects that go beyond unemployment. For example, higher minimum wages encourage employers to cut back on training, thus depriving low wage workers of an important means of long-term advancement, in return for a small increase in current income. For many workers this is a very bad trade-off, but one for which the law provides no alternative.
Summary of Research on the Minimum Wage
The minimum wage reduces employment.
Currie and Fallick (1993), Gallasch (1975), Gardner (1981), Peterson (1957), Peterson and Stewart (1969).
The minimum wage reduces employment more among teenagers than adults.
Adie (1973); Brown, Gilroy and Kohen (1981a, 1981b); Fleisher (1981); Hammermesh (1982); Meyer and Wise (1981, 1983a); Minimum Wage Study Commission (1981); Neumark and Wascher (1992); Ragan (1977); Vandenbrink (1987); Welch (1974, 1978); Welch and Cunningham (1978).
The minimum wage reduces employment most among black teenage males.
Al-Salam, Quester, and Welch (1981), Iden (1980), Mincer (1976), Moore (1971), Ragan (1977), Williams (1977a, 1977b).
The minimum wage helped South African whites at the expense of blacks.
Bauer (1959).
The minimum wage hurts blacks generally.
Behrman, Sickles and Taubman (1983); Linneman (1982).
The minimum wage hurts the unskilled.
Krumm (1981).
The minimum wage hurts low wage workers.
Brozen (1962), Cox and Oaxaca (1986), Gordon (1981).
The minimum wage hurts low wage workers particularly during cyclical downturns.
Kosters and Welch (1972), Welch (1974).
The minimum wage increases job turnover.
Hall (1982).
The minimum wage reduces average earnings of young workers.
Meyer and Wise (1983b).
The minimum wage drives workers into uncovered jobs, thus lowering wages in those sectors.
Brozen (1962), Tauchen (1981), Welch (1974).
The minimum wage reduces employment in low-wage industries, such as retailing.
Cotterman (1981), Douty (1960), Fleisher (1981), Hammermesh (1981), Peterson (1981).
The minimum wage hurts small businesses generally.
Kaun (1965).
The minimum wage causes employers to cut back on training.
Hashimoto (1981, 1982), Leighton and Mincer (1981), Ragan (1981).
The minimum wage has long-term effects on skills and lifetime earnings.
Brozen (1969), Feldstein (1973).
The minimum wage leads employers to cut back on fringe benefits.
McKenzie (1980), Wessels (1980).
The minimum wage encourages employers to install labor-saving devices.
Trapani and Moroney (1981).
The minimum wage hurts low-wage regions, such as the South and rural areas.
Colberg (1960, 1981), Krumm (1981).
The minimum wage increases the number of people on welfare.
Brandon (1995), Leffler (1978).
The minimum wage hurts the poor generally.
Stigler (1946).
The minimum wage does little to reduce poverty.
Bonilla (1992), Brown (1988), Johnson and Browning (1983), Kohen and Gilroy (1981), Parsons (1980), Smith and Vavrichek (1987).
The minimum wage helps upper income families.
Bell (1981), Datcher and Loury (1981), Johnson and Browning (1981), Kohen and Gilroy (1981).
The minimum wage helps unions.
Linneman (1982), Cox and Oaxaca (1982).
The minimum wage lowers the capital stock.
McCulloch (1981).
The minimum wage increases inflationary pressure.
Adams (1987), Brozen (1966), Gramlich (1976), Grossman (1983).
The minimum wage increases teenage crime rates.
Hashimoto (1987), Phillips (1981).
The minimum wage encourages employers to hire illegal aliens.
Beranek (1982).
Few workers are permanently stuck at the minimum wage.
Brozen (1969), Smith and Vavrichek (1992).
The minimum wage has had a massive impact on unemployment in Puerto Rico.
Freeman and Freeman (1991), Rottenberg (1981b).
The minimum wage has reduced employment in foreign countries.
Canada: Forrest (1982); Chile: Corbo (1981); Costa Rica: Gregory (1981); France: Rosa (1981).
Characteristics of minimum wage workers
Employment Policies Institute (1994), Haugen and Mellor (1990), Kniesner (1981), Mellor (1987), Mellor and Haugen (1986), Smith and Vavrichek (1987), Van Giezen (1994).
http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm