Abstract
The minimum wage needs to be understood as a reference point for the larger low-wage labor market. By constructing ten wage contours on data from the CPS, it becomes clear that there are welfare effects for the middle class from raising the minimum wage. In years when there were increases in the statutory minimum wage, there were also increases in the median wages of each contour. And in years when there were no increases in the statutory minimum wage, the median wages in each contour remained the same. As those earning at the top of the tenth contour in 2015 were earning the equivalent of $125,000, it would appear that the minimum wage may have positive welfare effects. A policy that places upward pressure on wages can also reduce income inequality. To the extent that the minimum wage does reduce income inequality it again serves as a tool to bolster the middle class. Institutions, in other words, do matter.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Balleer, Almut, and Thija van Rens. 2013. Skill-Biased Technological Change and the Business Cycle. The Review of Economics and Statistics 95 (4): 1222–1237.
Card, David, and Alan B. Krueger. 1995. Myth and Measurement: The New Economics of the Minimum Wage. Princeton: Princeton University Press.
Dunlop, John T. 1957. The Task of Contemporary Wage Theory. In New Concepts in Wage Determination, ed. George W. Taylor and Frank C. Pierson. New York: McGraw-Hill Book Co.
Figart, Deborah M., and June Lapidus. 1995. A Gender Analysis of U.S. Labor Markets for the Working Poor. Feminist Economics 1 (3): 60–81.
Freeman, Alida Castillo, and Richard B. Freeman. 1991. Minimum Wages in Puerto Rico: Textbook Case of a Wage Floor? NBER Working Paper No. 3759, June.
Gilens, Martin. 2012. Affluence & Influence: Economic Inequality and Political Power in America. New York/Princeton/Oxford: Russell Sage Foundation and Princeton University Press.
Gordon, Robert J. 1995. Is There a Tradeoff Between Unemployment and Productivity Growth? NBER Working Paper 5081, April.
Gordon, David M. 1996. Fat and Mean: The Corporate Squeeze of Working Americans and the Myth of Managerial “Downsizing”. New York: The Free Press.
Haarlander, Lisa, and Sandra Tan. 2004. Minimum Wage Outlook: Opponents Say the Wage Will Force Price Hikes and Cuts in Staff and Their Hours, While Supporters Say It Reflects the Reality of Businesses Today. The Buffalo News, December 11, p. A1.
Juhn, Chinhui, Kevin Murphy, and Brooks Pierce. 1993. Wage Inequality and the Rise in Returns to Skills. Journal of Political Economy 101 (3): 410–442.
Kahn, Lawrence M., and Michael Curme. 1987. Unions and Nonunion Wage Dispersion. The Review of Economics and Statistics 69 (4): 600–607.
Katz, Lawrence, and Alan B. Krueger. 1992. The Effect of the Minimum Wage on the Fast-Food Industry. Industrial and Labor Relations Review 46 (1): 6–21.
Katz, Lawrence, and Kevin M. Murphy. 1992. Changes in Relative Wages, 1963–1987: Supply and Demand Factors. Quarterly Journal of Economics 107: 35–79.
Neumark, David, Mark Schweitzer, and William Wascher. 2004. Minimum Wage Effects Throughout the Distribution. The Journal of Human Resources 39 (2): 425–450.
Sandler, Manfred, and Rudiger Wapler. 2004. Endogenous Skill-Biased Technological Change and Matching Unemployment. Journal of Economics 81 (1): 1–24.
Schattschneider, E.E. 1960. The Semisovereign People: A Realist’s View of America. New York: Holt, Rinehart.
Solow, Robert. 2008. Introduction: The United Kingdom Story. In Low-Wage Work in the United Kingdom, ed. Candice Lloyd, Geoff Mason, and Ken Mayhew. New York: Russell Sage Foundation.
Spriggs, William E., and Bruce E. Klein. 1994. Raising the Floor: The Effects of the Minimum Wage on Low-Wage Workers. Washington, DC: Economic Policy Institute.
Vivarelli, Marco. 2014. Innovation, Employment and Skills in Advanced and Developing Countries: A Survey of Economic Literature. Journal of Economic Issues 48 (1): 123–154.
Volscho, Thomas W., Jr. 2005. Minimum Wages and Income Inequality in the American States, 1960–2000. Research in Social Stratification and Mobility 23: 347–373.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2018 The Author(s)
About this chapter
Cite this chapter
Levin-Waldman, O.M. (2018). Middle Class Welfare Effects. In: Restoring the Middle Class through Wage Policy. Binzagr Institute for Sustainable Prosperity. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-74448-3_3
Download citation
DOI: https://doi.org/10.1007/978-3-319-74448-3_3
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-319-74447-6
Online ISBN: 978-3-319-74448-3
eBook Packages: Economics and FinanceEconomics and Finance (R0)