The Impact Of Minimum Wage
Introduction
Supporters of increasing the federal minimum wage contended it would offer significant changes to the lives of millions of working-class Americans. Opponents insisted the measure would cost the economy hundreds of thousands of jobs and provide only marginal help to a relatively small group of wage earners. The numbers suggest the answer lies somewhere in between. Increases in the minimum wage sometimes have been followed by dramatic spikes in the nation's unemployment rate, as was the case in the early 1980s, as well as lulls or even decreases in unemployment, as happened in the late 1990s. Contrary to its more recent stagnation, the minimum wage increased almost annually in the 1960s and 1970s, hitting an inflation-adjusted high of $1.60 ($9.27 in 2007 dollars) in 1968 and staying around that level through the following decade, according to the U.S. Bureau of Labor Statistics. During the 1970s, seasonally adjusted unemployment varied wildly, from 3.9 percent in January 1970 to 8.1 percent in 1975 and then back down to 5.9 percent in 1979. The wage grew to $3.35 an hour in 1981, but would not budge from there until 1990. Following the 1981 increase, national unemployment hit its highest rate since the Depression. The minimum wage held steady throughout the soaring unemployment rates of the early 1980s, including the 10.4 percent posted in January 1983. The 1990s opened with two more minimum-wage increases, and unemployment zoomed. Then the minimum wage increased $5.15 in 1997, when unemployment dipped to 4.7 percent. See Table 1.
Table 1
Finally in 2007 the federal government has passed legislation that increases the minimum wage, the first increase in the national minimum wage in a decade. In addition, a number of states have...
View Full Essay