Minimum Wage Increase: What It Means for People with Disabilities

[Excerpt] The federal government has passed legislation that increases the minimum wage, the first increase in the national minimum wage in a decade. In addition, a number of states have recently increased the minimum wage to a rate higher than the federal level. For people with significant disabilities who either earn the minimum wage or close to it, these changes present a wonderful opportunity to increase their income. At the same, there are some issues that people with disabilities may need to consider regarding the changes in minimum wage. The purpose of this fact sheet is to review how minimum wage increases are relevant for people with disabilities and provide guidance on how to deal with the impact of the minimum wage on benefits and other issues

Federal Minimum Wage, Tax-Transfer Earnings Supplements, and Poverty

[Excerpt] This report focuses on the impact of minimum wage and tax-transfer earnings supplements for workers of different family types. It does so through illustrating how the minimum wage and federal tax-transfer policies affect the income of a minimum wage worker who works full-time, full-year in four different family types: a single childless worker; a worker supporting a married couple; a single mother with two children; and a married couple with two children. These family types are chosen to highlight the different treatment federal tax-transfer policies have on workers of different family types. They were not chosen as representative of most minimum wage workers. The illustrations show the impact of policies on two childless workers—one married, one not. They also show the impact of two workers with children—one married, one not. The report highlights how policies differ between families with children, and families without children. This report supplements these illustrations with some background on policies, as well as some policy considerations that apply generally to debates on the minimum wage and tax-transfer policies. Full-year, full-time work at the minimum wage is not common. In 2012, 32% of workers earning the minimum wage worked full-time. Again, the illustrations were not chosen to be representative of most minimum wage workers. Full-time, full-year work was chosen for illustrative purposes. Additionally, the income produced by full-time, full year work at the minimum wage is an important policy benchmark, as it reflects the federally-determined minimum income for someone with full-time involvement in the labor force. This report • describes current law minimum wage and tax-transfer earnings supplement policies; • provides the illustrations of gross earnings and net income (after taxes and SNAP benefits) for full-time full-year minimum wage workers at both the current minimum wage ($7.25 per hour) and the proposed$10.10 minimum wage; and • discusses some of the policy implications of addressing poverty through both the minimum wage and federally-funded earnings supplements

Minimum wage noncompliance and the sub-minimum wage rate

The present note examines the effect of minimum wage noncompliance on the sub-minimum wage rate in a competitive labor market. The note shows that noncompliance shifts leftward the demand curve of labor and shifts rightward the supply curve of labor, unambiguously leading to a fall in the equilibrium sub-minimum wage rate. Two implications follow: first, contrary to a major result in the minimum wage literature, noncompliance must not necessarily reduce employment (as compared to the pre-law level) it may even increase employment if the deterrent effect of the expected penalty is more than offset by the inducement effect of a lower wage rate. Secondly, and more importantly, if the minimum wage law aims at improving low wages, workers are better off without a law than with one which is not accompanied with sufficient inducement to ensure compliance.

Policy variables as instruments for the minimum wage

The international literature on minimum wage greatly lacks empirical evidence from developing countries. In Brazil, not only are increases in the minimum wage large and frequent but also the minimum wage has been used as anti-inflation policy in addition to its social role. This paper estimates the effects of the minimum wage on employment using monthly household data from 1982 to 2000 aggregated at regional level. A number of conceptual and identification questions is discussed as tentative explanation of the non-negative estimates found in the literature, for example: (1) The use of political variables as excluded exogenous instruments for the minimum wage variable; (2) The superiority of “spike” over “fraction affected” and “Kaitz index” as a minimum wage variable; (3) The decomposition of the minimum wage employment effect into hours worked and number of jobs effects; (4) Robustness checks accounting for sorting into informal and public sectors. Robust results to various alternative specifications and instrumental variables indicate that an increase in the minimum wage has moderately small adverse effects on employment