State Minimum Wages: A Policy That Works

Publication Date: November 2006

Publisher: Economic Policy Institute

Author(s): Paul Wolfson

Research Area: Labor

Type: Brief

Abstract:

Although the federal minimum wage last rose in September 1997, minimum wages in the United States have not been static since then. Through the end of 2005, 17 states and the District of Columbia raised their minimum wages a total of 47 times. The list of these states includes both a border state, Delaware, and a southern state, Florida; all states north or east of Pennsylvania except for New Hampshire; the three states at the western edge of the Great Lakes; and the five states bordering the Pacific.

Compared to the federal minimum wage of $5.15, the median minimum wage in these 18 states had risen from $5.15 to $6.55 by December 2005; they ranged from $5.70 in Wisconsin to $7.35 in Washington State. Have these state actions had any effect? Are wages higher than they would have otherwise been, i.e., are these higher minimums reaching their intended beneficiaries? Is employment worse than it would have otherwise been? The evidence presented here suggests that the answers are, respectively, yes, yes, and no.