« "OBIC stymies OPEC": Why not? | Main | I guess this new book is a must-read »


The minimun wage raises from $5.15 to $5.85. This means that all workers (less exemptions) earning between $5.15 to $5.84 will get a pay hike and hence benefit from the increase. Perhaps they help to close the gap.

The whole argument is muddied since many states have a higher Min wage than the Fed.

You wrote: "About 13 million workers, or 10 percent of the nation's work force, will benefit from an increase in the minimum wage, the labor-backed Economic Policy Institute said."

I read during the debates on the merits of a minimum wage increase that some union wages are tied to the minimum wage, and that when it rises so do many other above minimum wage rates.

This might explain why a labor backed institute might conclude that a rise would effect many more indirectly.

TSM and CR:
Good points, but twelve million is a lot of ground to make up. Maybe the EPI site provides the explanation.

I'm aware of the states' minimum wage effect, but I'm skeptical that the current increase would account for many multiples of the current tally of minimum wage workers. Besides, those states could nullify any such effect by turning around and bumping theirs up again.

I wouldn't trust EPI as a good source for data. From my past experience in examining income distribution in the U.S., the analysis of what they post often has a lot of problems, often missing the bigger picture (such as 12 million people) through what I believe to be a myopic and slanted focus. You'll always be much better off going directly with source data from BEA, BLS or the Census.

Speaking of which, a couple of key links - first, here's a tool for measuring the impact of a minimum wage increase in the U.S. (http://tinyurl.com/332btx) - the links referenced in this post will provide you with the best approximation that I have of the distribution of income in the U.S. for hourly workers, particularly at the low end of the income spectrum.

More generally, I've also looked at how the distribution of income for all individual income-earners has changed from 1995 to 2005. Here's the national picture (http://tinyurl.com/292lkk), but more importantly, here's the changes by age group (http://tinyurl.com/2g858b), which shows some pretty dramatic reductions in the numbers of individuals earning the lowest incomes.

The great untold story of the U.S. economy of the last decade is that the ranks of the middle class in the U.S. are surging while the ranks of the low income are declining.

You'll find a lot of my analysis on the topic here: http://tinyurl.com/2r8np5. The links at bottom the first post will take you through the whole analysis.


Thanks, that's a lot of good, informative work you've done on income distribution changes.

Regarding the min-wage change: many people are exempted (eg, self-employed, firms with less than a threshold number of employees), so I would expect the change to have no effect on those already making less than minimum; if they are included in the EPI analysis, I'd consider it a flaw.

Also, in the income distribution analysis, it's important to remember that govt spending is redistribution, and it's skewed towards the lower income groups as one would expect (http://tinyurl.com/3ypdw8). Real disposable personal income from the BEA, after taxes and govt spending, is the closest I've found to the net effect of all that, but they only publish aggregate totals, unfortunately.

(FYI, I got a 404 error on that last link you posted.)

2nd try at the link I posted...


I looked at some of the minimum wage numbers some time last year, and a good number of these earners were called "sub minimum wage earners" or something similar. These were mostly restaurant people, who usually made an hourly wage of less than $3.00/hour, yet in most cases, received tips that put them well over $5.15/hour.

I know bartenders that make over $50,000 a year. Not quite the wage slaves the unions portray them to be.


That'll teach me to put punctuation in at the end of a link! Try:



"Is it possible that the minimum wage debate is 1% substance, 99% political positioning? "

No, it's a certainty. Come on! 70 cents an hour? How many businesses will go in the tank with that?

I suggest that if 70 cents an hour will cause that much harm to a business one ought to question why it's around.

Heck, if I were going to have a real minimum wage, I'd look at something north of 10 bucks.

Many businesses key their base rate to the minimum wage, e.g., Borders Books starts employees at minimum wage +$2, and raises wages companywide for employees below supervisor level. Practices like this may well factor into the missing workers cited above.

Perhaps some of the twelve million who will benefit from an increase in minimum wage will be the business owners and managers, who now have a better excuse to get rid of their least productive employees.

Perhaps some of the twelve million are people who will benefit by losing their jobs, thereby becoming eligible for various government benefits.

Perhaps a significant number of predatory lenders will benefit from the increased fee-paying capacity of the working poor.

Perhaps some of the twelve million are politicians who can get elected by catering to popular ignorance, which is politically much easier than working towards real solutions to our underlying problems.

See, there are all kinds of possibilities! Unless of course by 'benefit' you mean a legitimate long-term economic benefit, in which case I have no idea.

Many union jobs are based on minimum wage. Thats why unions are so much in favor of minimum wage raises. For instance a general laborer wage might be set to 3 or 4 times minumim wage. If minimum wage goes up 20 cents they get an 80 cent raise. No contract renegotiation is necessary. Big win for unions they don't have to renegotiate with individual companies...just buy off the congress.

Thank you! I hadn't thought of that: a back-door way to get a raise while hiding behind the banner of "helping the working poor."

Any idea how many middle class wage-earners are affected in that way?

I didn't find much, but I know the practice is common. I did find another reference to it here though.


Thanks again. I sent the epi research dept a question about the number of non-min-wage union workers who would benefit from a min-wage hike. I'd be surprised if they didn't have some statistics on that.

Re: Unions

Was involved with managing union pipe fitters for many years. Never once did the minimum wage come into play during contract negotiations. They were more interested in an annual COLA and work rules. We fought over work rules more than the 25 or 50 cent an hour increases.

Maybe other unions do it differently.

good points. Your graphs also may suggest that real minimum wage has fallen so much, that employers had to pay more.

The data on the growing income gap would suggest that there is still a major problem.

The comments to this entry are closed.