May 26, 2016 1:43PM 

# Five Facts about the Minimum Wage 

By [Alan Reynolds](https://www.cato.org/people/alan-reynolds) 

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1\. A dozen California metropolitan areas – including [big cities](http://www.dof.ca.gov/research/demographic/reports/estimates/e-1/documents/RankCities_2016.xls) like Fresno, Stockton, Bakersfield and Modesto – already have [unemployment rates](http://www.bls.gov/web/metro/laummtrk.htm) from 8.0% to 18.6%. Yet California’s [statewide minimum](http://www.wsj.com/articles/race-for-15-minimum-wage-heats-up-1459451862) wage is now scheduled to rise every year through 2022.

2. [News reports](http://www.wsj.com/articles/push-for-15-raises-payand-tensions-1462491407) imagine that raising the minimum wage will push up other wages, so *average* wages would supposedly rise more quickly. On the contrary, three of the four most recent increases in the federal minimum wage were quickly followed by prolonged stagnation in average wages.

![change in avg and min wage](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/higher_minimum_wage_not_associated_with_higher_avg_wage.png?itok=l6FioGXI) 

3\. In 2015, twice as many earned [less than](http://www.bls.gov/cps/cpsaat44.htm) the $7.25 federal minimum wage (1,691,000) as the number paid that minimum wage (870,000).

4. Every time the federal minimum wage has been increased the number earning [less than](https://www.cato.org/publications/commentary/minimum-wage-hike-means-more-sub-minimum-workers) that minimum [always increased](https://www.cato.org/publications/commentary/when-more-is-less) dramatically. This was not just true of teenagers but (as the graph below shows) also for those over 25. When the minimum wage is pushed up faster than the market would have moved it, the effect is *to greatly increase the proportion of jobs paying less than the minimum (*including working for cash in the informal economy*)*. Employers offering *less than* the minimum, [legally](http://money.cnn.com/2014/04/23/smallbusiness/minimum-wage-exemptions/) or otherwise, then enjoy a flood of unskilled applicants unable to compete for scarcer opportunities among larger businesses subject to minimum wage laws. Such intensified rivalry for sub-minimum-wage jobs then pushes the lowest wages even lower.

![more were paid less than min when min wage went up](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/below_minimum_wage.png?itok=Uoq8s6dp) 

5\. Regardless of federal, state or city laws, the actual minimum wage is always zero.

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[Government and Politics](https://www.cato.org/government-politics), [Health Care](https://www.cato.org/health-care), [Regulation](https://www.cato.org/regulatory-studies) 

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