Lucy Nicholson / Reuters Super-size it: fast-food workers on strike in Los Angeles, August 2013.

The Truth About the Minimum Wage

Neither Job Killer Nor Cure-All

It has been more than eight years since many of the United States’ cashiers, dishwashers, janitors, lifeguards, baggage handlers, baristas, manicurists, retail employees, housekeepers, construction laborers, home health aides, security guards, and other minimum-wage workers last got a raise. The federal minimum wage now stands at just $7.25. In real terms, these workers’ earnings have declined by nearly 13 percent since the last hike, in 2009—and have fallen by over one-third since 1968, when the real federal minimum wage was at its peak of $11.38 in today’s money (although only $1.60 then). Although most Americans think the minimum wage should go up—one 2017 poll found that 75 percent supported raising it to $9.00 per hour—today’s Republican-controlled Congress is unlikely to act.

But the lack of progress on Capitol Hill should not give one the impression that little is happening with regard to the minimum wage. In fact, never has there been so much action—it’s just that it is happening at the state and, increasingly, city levels. The “Fight for 15” has become a rallying call on the left and has resulted in some notable successes. Twenty-nine U.S. states plus the District of Columbia now have minimum wages that exceed the federal minimum, as do about 40 municipalities. 

Proponents of the minimum wage claim that a high minimum wage is the best way to ensure an acceptable standard of living for all Americans, whereas opponents counter that it is likely to destroy jobs. In the debate between these two camps, feelings often run high. But behind the emotion, economics, both theoretical and empirical, can help one make sense of the issues at stake. The bottom line is that there is not much evidence that the minimum wage is currently a job killer in the United States, and so there is room for it to go up. Raising the minimum wage, however, is not a particularly effective tool to combat poverty and share the benefits of growth.

IN THEORY...

The recent experiments with minimum-wage increases

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