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Exploring the Politics of the Minimum Wage

  • Oren M. Levin-Waldman

    (The Jerome Levy Economics Institute)

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    As much as the minimum wage is an economic issue, it is above all a political one. First, there are the politics surrounding the choice of models. Second, there are the political interests of those who engage in the debate. The choice of methodological models can lead to different ideological positions which ultimately get played out in the political arena. This paper specifically examines the debate between two models -- the "demand constrained" v. the "supply constrained" -- and the ideological implications that flow from each. After which, it addresses itself to the question of why it is that one particular model has become the political focus of the debate at the expense of others. Because good data on the minimum wage has been so lacking the issue has been ripe for political manipulation. This is most evident in those states with "right-to-work" laws. An examination of voting patterns by members of Congress shows that while Democratic members generally vote for minimum wage increases, they consistently vote against them when they are from "right-to-work" states. Conversely, while Republican members generally vote against increases in the wage, they tend to vote for them when they come from states with high union densities. What this suggests, then, is that given the fact that empirical data on the effects of the minimum wage have been ambiguous at best, it is more likely that the minimum wage will increase when there is strong political support for it. Or at the very least, it is more likely to increase when strong political arguments can be made on its behalf.

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    File URL: http://econwpa.repec.org/eps/mac/papers/9805/9805010.pdf
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    Paper provided by EconWPA in its series Macroeconomics with number 9805010.

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    Length: 37 pages
    Date of creation: 28 May 1998
    Date of revision:
    Handle: RePEc:wpa:wuwpma:9805010
    Note: Type of Document - Acrobat File; prepared on IBM PC ; to print on PostScript; pages: 37; figures: included
    Contact details of provider: Web page: http://econwpa.repec.org

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    1. Rees, Albert, 1989. "The Economics of Trade Unions," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226707105.
    2. Katz, L.F. & Krueger, A.B., 1992. "The Effect of the Minimum Wage on the Fast Food Industry," Harvard Institute of Economic Research Working Papers 1584, Harvard - Institute of Economic Research.
    3. Robert H. Meyer & David A. Wise, 1982. "The Effects of the Minimum Wage on the Employment and Earnings of Youth," NBER Working Papers 0849, National Bureau of Economic Research, Inc.
    4. Alida Castillo Freeman & Richard B. Freeman, 1991. "Minimum Wages in Puerto Rico: Textbook Case of a Wage Floor?," NBER Working Papers 3759, National Bureau of Economic Research, Inc.
    5. Gordon, Robert J, 1995. "Is There a Trade-off between Unemployment and Productivity Growth?," CEPR Discussion Papers 1159, C.E.P.R. Discussion Papers.
    6. Richard V. Burkhauser & T. Aldrich Finegan, 1989. "The minimum wage and the poor: The end of a relationship," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(1), pages 53-71.
    7. David Neumark & William Wascher, 1992. "Employment effects of minimum and subminimum wages: Panel data on state minimum wage laws," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(1), pages 55-81, October.
    8. Brown, Charles, 1988. "Minimum Wage Laws: Are They Overrated?," Journal of Economic Perspectives, American Economic Association, vol. 2(3), pages 133-45, Summer.
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