NCPA - National Center for Policy Analysis

The Unemployment Effects Of A Minimum Wage Hike

January 14, 2000

The U.S. Senate has already passed a minimum wage amendment to the bankruptcy reform bill (S.625) that would raise the minimum wage by $1 over three years to $6.15 per hour.

Employment Policy Foundation analysts say increasing the minimum wage will be an additional barrier to work for the over 40 percent of workers in the lowest income quintile who report no work in the preceding year.

  • Workers with less than a high school diploma make up 40.8 percent of workers earning the minimum wage or below.
  • The unemployment rate of these less educated workers was 6.5 percent in November 1999, more than twice the rate of individuals with a high school diploma and no college education -- 3.2 percent.
  • With a proposed minimum wage increase of 19 percent over three years, their unemployment rate will likely increase to 8.3 percent and deny an additional 217,000 access to job experience opportunities.
  • Similarly, the youth unemployment rate is likely to increase from 10.1 percent to 11.9 percent.

President Clinton has threatened to veto the Senate minimum wage measure, backing instead Democratic proposals for a minimum wage increase of $1 over 13 months. Meanwhile, the House appears temporarily stymied by three non-majority factions, each with differing views concerning minimum wage legislation.

Source: Jill Jenkins, "Minimum Wages: Many Poor Are Not Winners," Fact & Fallacy, January 12, 2000, Employment Policy Foundation, 1015 15th Street, N.W., Suite 1200, Washington D.C. 20005, (202) 789-8685.


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