How Well Have Rural and Small Metropolitan Labor Markets Absorbed Welfare Recipients?. Increase in Minimum Wage

04/01/2001

The federal minimum wage was $4.25 an hour from 1991 to 1997. In 1997, it increased to $5.15, where it has remained. In addition, some states have imposed minimum wages that exceed the federal rate. Among our study states, these include Oregon ($6.50 per hour) and Vermont ($5.75 an hour).

Economists have long debated the effect of minimum wage laws on employment. Some argue that it results in job loss; others argue that the minimum wage was well below the equilibrium rate in 1997, and increasing it had no effect on labor demand.