Today, in his weekly radio address, President Clinton will call on Congress to pass clean, straightforward legislation to raise the minimum wage by $1 – from $5.15 to $6.15 – in two equal steps. The President first called for an increase in the minimum wage in his State of the Union Address in January 1999. Congress at first stalled and then held the minimum wage increase hostage for tax cuts that are part of a costly and fiscally irresponsible plan that would drain the entire surplus and leave nothing for priorities like an affordable Medicare prescription drug benefit. Congressional delay has cost a full-time minimum wage worker over $900.

• The President’s Proposal to Raise the Minimum Wage by $1 to $6.15 an Hour Would Potentially Benefit More than 10 Million American Workers – Most of Whom Are Adult Workers. 10.1 million hourly paid workers make between $5.15 and $6.14 an hour and thus would potentially benefit from a $1 increase in the minimum wage. About 69 percent of these workers are adults (age 20 or over), about 60 percent are women, about 45 percent worked full-time, and about 33 percent are parents with children under age 18. In 1997, the earnings of the average minimum wage worker accounted for 54 percent of their family's total earnings.

• Increasing the Minimum Wage Would Help Hard-Pressed Families Pay for Groceries, Rent, and Other Necessities. Raising the minimum wage from $5.15 to $6.15 would raise the annual earnings of a full-time worker by about $2,000 a year. For a full-time worker, the minimum wage increase would translate into enough money to pay for nearly 7 months of groceries or 5 months of rent. Congressional delay has cost a full-time minimum wage worker over $900 since September 1, 1999 – the date originally proposed for the first 50 cent increase by President Clinton, Senator Kennedy, and Representative Bonior.

• The President’s Modest Increase Would Simply Restore the Real Value of the Minimum Wage to What it Was in 1982. Raising the minimum wage by $1 over two years would simply restore the real value of the minimum wage to what it was in 1982. This would help reverse the erosion in the real value of the minimum wage during the 1980s when, between January 1981 and March 1990, the minimum wage was unchanged at $3.35 an hour, while prices rose by nearly 50 percent.

• The Impact from Last Minimum Wage Increase Is Clear: over 10 Million Workers Got A Raise and Strong Job Growth Continued. Since the last minimum wage increase in 1996/97, the economy has created more than 11 million jobs and the unemployment rate has fallen from 5.2 percent in September 1996 to 4.0 percent in June 2000, near its lowest level in over thirty years. Labor market trends for workers most affected by the minimum wage increase – including younger workers with lower educational levels and minorities – also show no negative impact of the minimum wage on employment.

• Economic Studies Find No Negative Effect of the Minimum Wage on Employment. Numerous careful economic studies, including ones by David Card and Alan Krueger of Princeton University, have shown that increasing the minimum wage has no negative effect on employment. Recent research has even suggested that higher wages can increase employment, because they increase employers’ ability to attract, retain, and motive workers. And they benefit workers by increasing the reward to work.

• The Minimum Wage Plays an Important Role in Ensuring That All Workers Share in a Growing Economy. In the last seven years, incomes have grown nearly as strongly from the bottom to the top of the income distribution, ending a decades long increase in inequality. In contrast, in the previous two decades inequality widened, as poorer workers saw their incomes decline in real terms. Research has shown that the decline in the real value of the minimum wage from 1979 to 1988 was responsible for approximately 24 percent of the increase in wage inequality experienced by men and about 32 percent of the increase in wage inequality for women.

• Recent Increases in the Minimum Wage Have Helped Reduce the Welfare Caseload. By increasing the reward to work, a higher minimum wage attracts new workers into the workforce. An analysis by the Council of Economic Advisers showed that the 90 cent increase in the minimum wage signed into law by President Clinton in 1996, and increased minimum wages in some states, were responsible for 10 to 16 percent of the decline in welfare caseloads between 1996 and 1998.

• Helping Ensure Parents Can Raise Their Children Out of Poverty. A working parent with two children earning the minimum wage in 1993 made $10,563 with the EITC (in 1998 inflation-adjusted dollars)—well below the poverty line. In 1993 the President fought for an increase in the EITC and in 1996 he fought for an increase in the minimum wage. As a result of these changes, a comparably situated family in 1998 was above the poverty line – making $13,268, a 26 percent inflation-adjusted increase in their standard of living.

Distribution of Wage and Salary Workers Paid Hourly Rates by State, 1999

Note: Workers in the $5.15 to $6.14 category would be directly affected by a $1.00 increase in the minimum wage. Those in the $6.15 to $7.14 category could be affected by spillovers.

Source: U.S. Department of Labor, Bureau of Labor Statistics, unpublished tabulations from the Current Population Survey, 1999.

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