Raising minimum wage won't lower poverty

Un débat intéressant, de plus en plus d’étude récente démontre qu’augmenter le salaire minimum ne réduit pas la pauvreté.

Lesson 4: Low-wage Work is Not a Clear-cut Stepping Stone to Higher-wage Work

If low-wage work were a short-term state that helped connect labor-market entrants or re-entrants  to longer-term, well-paid employment, high shares of low-wage work would be less of a social  concern. Indeed, if low-wage work facilitated transitions from unemployment to well-paid jobs, countries might want to encourage the creation of a low-wage sector to improve workers’ welfare in  the long term.

Unfortunately, the preponderance of evidence suggests
that low-wage work is a “sticky” state.

Not  only are low-wage workers likely to stay in low-wage jobs from one year to the next, they are also  more likely than workers in higher-wage jobs to fall into unemployment or to leave the labor force  altogether.

He concludes: “not all  jobs are ‘good’ jobs, in the sense of improving  future prospects, and ... low-wage jobs typically do not lead on to better things.”

None of this is to suggest that economic policy should not seek to create employment opportunities for less-skilled, less-educated, or less-experienced workers.

The point is that low-wage work does not appear to be a self-correcting problem. (1)

Extrait de: Raising minimum wage won't lower poverty, By Michael Saltsman, Special to CNN, Fri September 16, 2011

Editor's note: Michael Saltsman is the research fellow at the Employment Policies Institute in Washington, a nonprofit that studies public policy issues surrounding employment growth.

(CNN) -- The U.S. Census Bureau reported this week that more Americans are living in poverty than ever before measured -- 46.2 million people.

This news was followed by a predictable response from advocacy groups like the National Employment Law Project which suggested that an increase in the minimum wage could help lift Americans out of poverty. And not only that; in a CNN.com op-ed, a policy analyst with the group said that an increase in the minimum wage could boost the economy and create 160,000 jobs.

These claims may pass muster as applause lines at a political rally, but they can't pass the test of rigorous empirical research.

The intuitive thinking on raising the minimum wage is straightforward: Raising the lowest wage that employers can pay will boost the paychecks of the lowest-paid workers and help pull them out of poverty. This line of logic persuaded 28 states to raise their minimum wage above the federal level between 2003 and 2007.

But research published last year in the Southern Economic Journal, a study funded in part by the Employment Policies Institute, found no evidence that these state minimum wage increases reduced poverty rates. The authors, from Cornell and American universities, suggested that some wage gains were flowing to higher-income families rather than the intended beneficiaries.

There's an even more important effect to account for: a decrease in employers' demand for the less-skilled and less-experienced. Those employees who receive a minimum wage increase may be better off, but those who lose their job because they're now more expensive to employ are most certainly worse off.

Research from economists David Neumark, Mark Schweitzer and William Wascher found a higher minimum wage results in a net increase in the proportion of families who are poor or near-poverty -- meaning that the "losers" from a minimum wage increase outnumber the "winners."

That's difficult for advocacy groups like NELP to grapple with, so they generally choose to ignore it. Instead, NELP's executive director dismisses basic economic concepts like supply and demand as "simplistic" and "18th century." In the CNN.com op-ed, the group's policy analyst directed readers to a handful of outlying studies -- in particular, a 1994 study on the minimum wage from economists David Card and Alan Krueger. (The latter was recently nominated to chair the President's Council of Economic Advisers).

Card and Krueger purportedly debunked the decades-long economic consensus that raising the minimum wage reduces employment, claiming that a 1992 minimum wage increase in New Jersey raised employment. To this day, the study is still showered with superlatives like "groundbreaking" by well-wishers at NELP.

But missing from that re-telling is the story's ending: Card and Krueger's headline-grabbing finding -- that raising the minimum wage had increased employment -- was discredited by another study that found serious problems with the quality of their data.

U.S. minimum wagesKey questions in the data collection process were so ambiguous that Card and Krueger reported some fast-food locations changing from zero full-time employees to 29 in less than a year; others reported a dramatic drop in part-time employees, from 60 people down to 15.

When actual payroll data was analyzed by economists Neumark and Wascher, the results flipped: far from boosting employment, the mandated wage increase in New Jersey had decreased employment -- just as standard economic theory would predict. That the New Jersey study was an outlier has become even more apparent in the years since: 85 percent of the most credible studies on the subject in the past two decades have pointed to job loss following an increase in the minimum wage.

So, where does that leave NELP and other like-minded advocates?

In recent months, they've tried to get traction on the "consumer spending" argument, which goes something like this: Raising the minimum wage will put more money in the pockets of low-income workers, who will then spend that money, drive the recovery, and create jobs.

At least the Krueger and Card findings were backed up by a data set, albeit a flawed one. By contrast, this job creation claim is based on no more than a distorted interpretation of a research paper written by three economists at the Federal Reserve Bank of Chicago. It also ignores a recently released Employment Policies Institute study that shows past increases in the minimum wage have provided no boost to Gross Domestic Product -- and even reduced output in certain industries that employ a high percentage of low-wage employees.

This lack of regard for the evidence demonstrates how the "higher costs means more jobs" mantra has become an article of faith for proponents of a higher minimum wage. To bring down the unemployment rate, businesses need to be willing to grow and invest -- neither of which is likely if we're hampering them with new employment costs. That doesn't mean turning a cold shoulder to the 46.2 million Americans living in poverty.

It just means pursuing smarter policies (like an expansion of the Earned Income Tax Credit) that are proven to boost incomes and employment without the unintended consequences associated with a minimum wage increase.

After all, working people aren't stuck at the minimum wage -- most earn a raise in their first one to 12 months on the job.

·         But they can't get the raise without experience,

·         and they can't get experience,

·         if they don't have a job.



Level (USD/h)




The Fair Labor Standards Act sets. The Fair Minimum Wage Act of 2007, which was signed into law on May 25, 2007,[4] increased the minimum wage by $2.10 over two years.


Level (USD/h)




Federal minimum applies.[5]



In 2009, a state law was passed to keep the state minimum wage 50 cents above the federal level.[6][7]



Raised pursuant to FMWA.[9] Previous rate pursuant to Arizona Proposition 202. This rate will be automatically adjusted annually based on the U.S. Consumer Price Index. This rate increase does not affect student workers in places such as libraries and cafeterias because those positions are given by universities, which are State entities.[10] The state minimum wage was increased 30 cents to $7.65 on January 1, 2012.[11] The state tipped also increased 10 cents to $4.35 per hour.



Applicable to employers of 4 or more employees.



San Francisco $10.24 since 1/1/2012.[13] The Minimum Wage Ordinance states that exempt employees must make at least twice the state minimum wage.



Set to increase or decrease according to yearly changes in inflation.[15] The state wage was increased to $7.36 per hour on January 1, 2011. The tipped wage increased to $4.34 per hour.[16] The state wage has been increased to $7.64 per hour on January 1, 2012. The tipped wage increases to $4.62 per hour.[17]



This rate was increased by 25 cents to $8.25 on January 1, 2010. Tipped employees earn $5.69 per hour, which is a tipped rate that is 69% of the state minimum wage. The wage is set to increase .75 cents to $9.00 beginning July 2012, and again the following year to $9.75.



Raised pursuant to FMWA.



Raised pursuant to FMWA. Rate is increased annually based upon a cost of living formula. $4.65 per hour for tipped employees.[18]


$7.25[8] [19]

Only applicable to employers of 6 or more employees. If fewer than 6 then there is no minimum at all. Tipped employees earn $2.13. The State law excludes from coverage any employment that is subject to the Federal Fair Labor Standards Act when the Federal rate is greater than the State rate.[20]



Tipped employees earn $7.00 (25 cents less than the current state minimum wage).[21]



Raised pursuant to FMWA.



Employers may pay anyone under the age of 18 fifty cents less. Tipped employees earn $4.95 (employers may claim credit for tips, up to 40% of wage[22]).



Raised pursuant to FMWA.



Most small retail and service establishments grossing less than 300,000 annually are not required to pay the minimum wage. Tipped employees can be paid 60% of the minimum wage, which is currently $4.35.



For many years, the minimum wage was set to $2.65, the lowest in the nation. The state wage was increased to match the federal level on January 1, 2010.



Raised pursuant to FMWA.



Federal minimum applies.



Tipped employees earn $3.75 (one-half of the current state minimum wage).[25]



Raised pursuant to FMWA. Tipped employees earn $3.63.[26]



$2.63 for service (tipped) employees, $1.60 for agricultural employees. With time-and-a-half on Sundays (for retail workers only) the Sunday minimum wage is $12.00/hr.



$2.65 for service (tipped) employees. Minors 16–17 years of age may be paid 85% of the minimum hourly wage rate (currently a rate of $6.29 per hour). Training wage for new employees ages 16 to 19 of $4.25 per hour for first 90 days of employment.[28]


$7.25 (see Note)

Small employers, whose annual receipts are less than $625,000 and who do not engage in interstate commerce, can pay their employees $5.25 per hour.[29] (Note: The federal minimum wage for all employers grossing more than $500,000 is $7.25 an hour as of July 24, 2009, so the Minnesota large-employer rate of $6.15 an hour is obsolete as of that date.)[30]



Federal minimum applies.



Raised pursuant to FMWA. This rate is automatically adjusted annually based on the U.S. Consumer Price Index rounded to the nearest five cents. In October 2011, the Missouri Department of Labor announced that the state minimum wage would not increase in 2012.[31]



Raised pursuant to FMWA. This rate is automatically adjusted annually based on the U.S. Consumer Price Index. Tip income may not be applied as an offset to an employee's pay rate. The minimum pay is $4/hour for business with less than $110,000 in annual sales.[8] The indexed minimum wage was increased 10 cents to $7.35 per hour on January 1, 2011.[32][33]



Raised pursuant to FMWA.



Rises with inflation.[34] The minimum wage increased to $8.25 on July 1, 2010. Employers who offer health benefits can pay employees $7.25.[35] In April 2011, Nevada's Labor Commissioner Michael Tanchek announced that the minimum wage would remain at $8.25 per hour for the July 2011-July 2012 period.[36]

New Hampshire


In June 2011, media reported that state lawmakers approved legislation that repeals the state minimum wage law and aligns it with federal law.[37] The new law does not affect the tipped wage rate, which will remain at $3.27 per hour.

New Jersey


New Mexico


$9.85 in Santa Fe [38] (now covering all employees, since expansion to employers with less than 25 employees, as of January 1, 2008). Santa Fe's minimum wage will increase to $10.29 per hour on March 1, 2012.[39][40] (This wage was previously tied with San Francisco as the highest in the country.) Albuquerque's minimum wage is $7.50 per hour (employers who provide health care or child care benefits can pay employees $6.50 per hour).[41]

New York


Raised pursuant to FMWA. New York also has a minimum for exempt employees $536.10 per week as of January 1, 2007.

North Carolina


Raised pursuant to FMWA.

North Dakota


Raised pursuant to FMWA.



This rate is adjusted annually on January 1 based on the U.S. Consumer Price Index.[42] and increased to $7.70 on January 1, 2012. $3.85 plus tips for tipped employees; $7.25 for employees under 16 years old and employees whose employers gross less than $283,000 per year.[43]



Raised pursuant to FMWA. Federal minimum wage used as reference; no actual amounts written in law.[8] $2.00 per hour for work not covered by federal minimum wage (OK Statutes 40-197.5).



Rises with inflation since 2003 due to Oregon Ballot Measure 25 (2002). The wage increased 30 cents from $8.50 to $8.80 on January 1, 2012.[44]



Raised pursuant to FMWA.

Rhode Island


$2.89 for employees receiving tips.

South Carolina


Federal minimum applies.

South Dakota


Raised pursuant to FMWA.



Federal minimum applies. The state does have a promised wage law whereby the employers are responsible for paying to the employees the wages promised by the employer.



Raised pursuant to FMWA. Federal minimum wage used as reference; no actual amounts written in law.[8][45]



Raised pursuant to FMWA. Federal minimum wage used as reference after legislative action; no actual amounts written in law. Current rate took effect on September 8, 2007. $2.13 an hour for tipped employees. [8]



Rises with inflation.[8] Tipped employees are paid $4.10.[46]



Raised pursuant to FMWA. Federal minimum wage used as reference.[8]



Employees aged 14 or 15 may be paid 85% of the minimum wage, which is $7.68 as of January 1, 2012. Minimum wage increases annually by a voter-approved cost-of-living adjustment based on the federal Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The wage increased 37 cents from $8.67 to $9.04 on January 1, 2012.

West Virginia


Applicable to employers of 6 or more employees at one location not involved in interstate commerce.[8]



Raised pursuant to FMWA. Tipped employees are paid $2.33.[47]




Source: Graphique + Tableau : List of U.S. minimum wages