Economist Statement on the Federal Minimum Wage

Dear Mr. President, Speaker Boehner, Majority Leader Reid, Congressman Cantor, Senator McConnell, and Congresswoman Pelosi:

July will mark five years since the federal minimum wage was last raised. We urge you to act now and enact a three-step raise of 95 cents a year for three years—which would mean a minimum wage of $10.10 by 2016—and then index it to protect against inflation. Senator Tom Harkin and Representative George Miller have introduced legislation to accomplish this. The increase to $10.10 would mean that minimum-wage workers who work full time, full year would see a raise from their current salary of roughly $15,000 to roughly $21,000. These proposals also usefully raise the tipped minimum wage to 70% of the regular minimum.

This policy would directly provide higher wages for close to 17 million workers by 2016. Furthermore, another 11 million workers whose wages are just above the new minimum would likely see a wage increase through “spillover” effects, as employers adjust their internal wage ladders. The vast majority of employees who would benefit are adults in working families, disproportionately women, who work at least 20 hours a week and depend on these earnings to make ends meet. At a time when persistent high unemployment is putting enormous downward pressure on wages, such a minimum-wage increase would provide a much-needed boost to the earnings of low-wage workers.

In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.

Sincerely,

Henry Aaron, Brookings Institution

Katharine Abraham, University of Maryland

Daron Acemoglu, Massachusetts Institute of Technology

Sylvia Allegretto, University of California, Berkeley

Eileen Appelbaum, Center for Economic and Policy Research

Kenneth Arrow, Stanford University*+

David Autor, Massachusetts Institute of Technology

Dean Baker, Center for Economic and Policy Research

William Baumol, New York University+

Jared Bernstein, Center on Budget and Policy Priorities

Josh Bivens, Economic Policy Institute

David Blanchflower, Dartmouth College

Alan Blinder, Princeton University

Heather Boushey, Washington Center for Equitable Growth

Clair Brown, University of California, Berkeley

Gary Burtless, Brookings Institution

David Cutler, Harvard University

Sheldon Danziger, Russell Sage Foundation

Angus Deaton, Princeton University+

Gregory DeFreitas, Hofstra University

Peter Diamond, Massachusetts Institute of Technology*+

Avinash Dixit, Princeton University+

Arindrajit Dube, University of Massachusetts, Amherst

Ronald Ehrenberg, Cornell University

Henry Farber, Princeton University

Nancy Folbre, University of Massachusetts, Amherst

Robert Frank, Cornell University

Richard Freeman, Harvard University

Claudia Goldin, Harvard University+

Robert Gordon, Northwestern University

Darrick Hamilton, The New School

Heidi Hartmann, Institute for Women’s Policy Research

Raúl Hinojosa-Ojeda, University of California, Los Angeles

Harry Holzer, Georgetown University

Marc Jarsulic, Center for American Progress

Lawrence Katz, Harvard University

Melissa Kearney, University of Maryland

Adriana Kugler, Georgetown University

Mark Levinson, SEIU

Frank Levy, Massachusetts Institute of Technology

Lisa Lynch, Brandeis University

Julianne Malveaux, Past President, Bennett College

Ray Marshall, University of Texas, Austin

Alexandre Mas, Princeton University

Eric Maskin, Harvard University*

Patrick Mason, Florida State University

Lawrence Mishel, Economic Policy Institute

Alicia Munnell, Boston College

Samuel Myers, University of Minnesota

Manuel Pastor, University of Southern California

Robert Pollin, University of Massachusetts, Amherst

Michael Reich, University of California, Berkeley

Robert Reich, University of California, Berkeley

William Rodgers, Rutgers University

Dani Rodrik, Institute for Advanced Study

Jesse Rothstein, University of California, Berkeley

Cecilia Rouse, Princeton University

Jeffrey Sachs, Columbia University

Emmanuel Saez, University of California, Berkeley

Isabel Sawhill, Brookings Institution

Thomas Schelling, University of Maryland*+

John Schmitt, Center for Economic and Policy Research

Robert Shapiro, Georgetown University

Heidi Shierholz, Economic Policy Institute

Dan Sichel, Wellesley College

Timothy Smeeding, University of Wisconsin, Madison

Robert Solow, Massachusetts Institute of Technology*+

A. Michael Spence, New York University*

William Spriggs, AFL-CIO

Joseph Stiglitz, Columbia University*

Lawrence Summers, Harvard University

Peter Temin, Massachusetts Institute of Technology

Mark Thoma, University of Oregon

Laura Tyson, University of California, Berkeley

Paula Voos, Rutgers University

* Nobel laureate
+ Has served as American Economic Association president

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