The Minimum Wage Debate

President Obama has made raising the minimum wage a centerpiece of his campaign against “income inequality.” In his most recent State of the Union Address, he called for raising the federal minimum wage to $10.10 per hour over the next 3 years. He also announced plans to unilaterally increase the minimum wage for federal contractors. Meanwhile, numerous governors are also pushing to increase their state minimum as well.

No doubt such proposals are politically popular. But the overwhelming body of evidence suggests that increasing the minimum wage would do little to reduce poverty or inequality. On the other hand it would almost certainly reduce employment opportunities, especially for those low skilled, entry level workers for whom a job represents the first rungs on the ladder of opportunity.

Over the last several years, Cato scholars have written on the pitfalls of raising the minimum wage.

Studies

Mark Wilson, “The Negative Effects of Minimum Wage Laws,” Policy Analysis No. 701, June 21, 2012.
Richard V. Burkhauser and T. Aldrich Finegan, “The Economics of Minimum Wage Legislation Revisited,” Cato Journal, Vol. 13, no1 (Spring/Summer 1993).
Clifford Thies, “The First Minimum Wage Laws,” Cato Journal, Vol. 10, No. 3 (Winter 1991).

The Facts

Four Reasons Not to Raise the Minimum Wage