Raising the Minimum Wage

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Raising the Minimum Wage: An Overdue Pay Raise for America's Working Families

THE WHITE HOUSE
Office of the Press Secretary

For Immediate Release

March 8, 2000

RAISING THE MINIMUM WAGE:
AN OVERDUE PAY RAISE FOR AMERICA’S WORKING FAMILIES

Today, 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 will say that working families deserve a raise which would restore the value of the minimum wage to its level in 1982. He will also reiterate his opposition to legislation that holds this increase hostage to provisions that delay this overdue pay raise -- costing a full-time minimum wage worker more than $900 over two years -- and jeopardize our ability to strengthen Social Security and Medicare and pay down the debt by 2013 for future generations. The President will also release a report by the National Economic Council which shows that raising the minimum wage is good for American workers and good for the American economy. Some highlights from the report are:

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. The report finds that 10.1 million hourly paid workers make between $5.15 and $6.14 an hour and 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. Delaying the minimum wage increase by spreading it out over 3 years would cost a full-time worker earning the minimum wage over $900 over two years.
The President’s Modest Increase Would Simply Restore the Real Value of the Minimum Wage to What it Was in 1982. This raise would help stop the erosion in the real value of the minimum wage during the 1980s when the minimum wage remained at $3.35 an hour, while prices rose by nearly 50 percent.
The Impact from Last Minimum Wage Increase Is Clear: 10 Million Workers Got A Raise, and There Is No Evidence that Jobs Were Lost. Since the last minimum wage increase was signed into law in 1996, the economy has created more than 10 million job, and the unemployment rate has fallen from 5.2 percent in September 1996 to 4.1 percent in February 2000. 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 found 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 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 minimum wage increase of 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. Because of the President’s efforts to increase the EITC in 1993 and raise the minimum wage in 1996, a similar family in 1998 was above the poverty line -- making $13,268 -- a 26 percent inflation-adjusted increase in their standard of living.