NCPA - National Center for Policy Analysis

Effect of Minimum Wage Increase

January 15, 2004

Sen. Ted Kennedy and others are prepared to offer legislation to increase the minimum wage from its current $5.15 per hour to $6.65. But a report from the Employment Policies Institute based on Census Bureau figures finds that "the bulk of the benefits" from raising the minimum wage "will not reach poor families."

According to EPI:

  • Just 15 percent of minimum wage earners are sole earners in families with children, and each of these sole earners has access to supplemental income through the federal earned income tax credit (EITC).
  • Nationally, the average family income of employees who would benefit from the proposed minimum wage hike is $43,795 -- state averages reach as high as $76,000.
  • Fully 85 percent of employees whose wages would be increased either live with working parents or another relative (41 percent), live alone (23 percent) or have a working spouse (21 percent).

Source: "Employment Policies Institute Report Concludes Raising Minimum Wage Does Not Help Poor Families," White House Bulletin, January 14, 2004; "Minimum Wage Statistics," Employment Policies Institute.


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