The minimum wage in 1990 was a low level compared to other years in American history, but since then it has been steadily increasing. The rate of unemployment has fallen in recent quarters, but the employment rate among high school dropouts has increased slightly. And employment to population ratios have held steady or even improved for both groups of adults. In addition, there have been no visible disruptions in employment or unemployment among teenagers since the minimum wage was raised in 1996 and 1997.
In this paper, David Card and Alan Krueger use BLS employer-reported payroll files from 1991 through 1997 to analyze employment growth in fast-food restaurants in New Jersey and the neighboring counties in Pennsylvania. They find no evidence of an adverse effect on employment, although some recent studies have shown the opposite. But there is still more to be learned from these studies. In the meantime, minimum wage increases should not be viewed as the end of the world.
Minimum Wage in 1990
A full-time $1 raise to the minimum wage would restore it to its peak value of $3.35 in 1982. That would restore the minimum wage to 75 percent of its peak level from 1968. That raise is still far below what most workers earn today, but it would put the economy back on track. This is a big reason why we shouldn’t forget to increase the minimum wage every few years. And it should be a reminder to ourselves that we still have a long way to go to meet the standards of a decent life.
The average person earning between $17 and $20 per hour is paid less than that. Moreover, workers who are paid at or near minimum wage are only a small part of the labor force. So it’s worth testing whether an increase in the minimum wage would have negative consequences on employment. And the answer to this question depends on the type of worker who is affected by the increase. There are many different types of workers who earn low wages and should be tested for the effects of increased minimum wages.
Today, there are 10.1 million Americans who earn between $5.15 and $6.14 an hour, and a $1 increase in the minimum wage would benefit them. In addition to adults, 60 percent of these workers are women, and 45 percent are full-time. And the average wage earner is a household head. This is why it’s critical to increase the minimum wage. That said, we should continue to make our minimum wage as high as possible to help people get out of poverty.
The policy behind the federal minimum wage in 1990 and 1991 has been a controversial subject. A 1996 study revealed that 9 percent of women earned less than $5.00. By 1998, only two percent of women earned less than that. That is an incredibly dramatic increase! For the next 20 years, we should continue to raise the minimum wage, so that more women can afford to buy things that they need. There’s no point in paying minimum wage if you’re not able to afford to buy groceries or a drink.
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