Minimum Wages

Minimum wages exist in more than one hundred countries, both
industrialized and developing. The United States passed a federal minimum wage law
in 1938 and has increased the minimum wage and its coverage at irregular intervals
ever since; in addition, as of the beginning of 2008, thirty-two states and the
District of Columbia had established a minimum wage higher than the federal level,
and numerous other local jurisdictions had in place "living wage" laws.
Over the years, the minimum wage has been popular with the public, controversial in
the political arena, and the subject of vigorous debate among economists over its
costs and benefits. In this book, David Neumark and William Wascher offer a
comprehensive overview of the evidence on the economic effects of minimum wages.
Synthesizing nearly two decades of their own research and reviewing other research
that touches on the same questions, Neumark and Wascher discuss the effects of
minimum wages on employment and hours, the acquisition of skills, the wage and
income distributions, longer-term labor market outcomes, prices, and the aggregate
economy. Arguing that the usual focus on employment effects is too limiting, they
present a broader, empirically based inquiry that will better inform policymakers
about the costs and benefits of the minimum wage. Based on their comprehensive
reading of the evidence, Neumark and Wascher argue that minimum wages do not achieve
the main goals set forth by their supporters. They reduce employment opportunities
for less-skilled workers and tend to reduce their earnings; they are not an
effective means of reducing poverty; and they appear to have adverse longer-term
effects on wages and earnings, in part by reducing the acquisition of human capital.
The authors argue that policymakers should instead look for other tools to raise the
wages of low-skill workers and to provide poor families with an acceptable standard
of living.