Friday, August 04, 2006


If you remember...

I wrote this in May and never got back to it. Submitted for your approval....

If you remember, a couple of weeks ago I talked about a Walter Williams article on the minimum wage and how good it was. I finally got around to reading some more of the data on the subject presented by the BLS (Bureau of Labor Statistics).

So I was wondering if there was any relationship to individual state's minimum wage laws and the percentage of workers earning the minimum wage or less (1). From a first glance, it does not appear that there is any relationship. Nearly 24 states and the District of Columbia have an percentage share (of minimum wage and lower earners) above the national average of 2.7%, whereas 22 states are below. FYI, the South and especially the South-Central United States appears to represent a great deal of those workers. Overall there doesn't seem to be any explicit connection between the two, however recognizing that, it seems that an increase in the minimum wage would likely not have substantial positive influences either. I will need to do a bit more work on this.

The most interesting state of all is Kansas which has a minimum wage rate below the national level at $2.65/per hour. The state also provides for a higher level of weekly hours available, before overtime rates apply at 46 weekly hours. So, let's take a look at their performance compared to the national averages: Kansas is slightly above the national average at 2.9%, meaning that approximately 2.9% of its hourly workforce earns $5.15 or less per hour. Most of the other states appear to hover around 2.6-3.1%. The high is New Mexico at 5.5% and the low is Alaska at 0.5%.

If you want to know a bit more, check out the map.

Note: There are problems with the data used to estimate minimum wage workers. The data comes from the CPS household survey, where individuals tend to understate their weekly earnings. So we can expect this to be the upper bound in general. There is also evidence towards overstatement and some misrepresentation since non-hourly workers (commission and salary based) are left out of the survey. So actual hourly income might be overstated. Recognizing both of these, we can use the average provided by BLS to estimate minimum-wage workers.

I think I need you to clarify just about everything in that post.
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