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The Minimum Wage and Family Incomes: An Update 1 (November 1993)

handle is hein.congrec/cbo10538 and id is 1 raw text is: 0 CONGRESSIONAL BUDGET OFFICE U.S. Congress Washington, DC 20515 Robert D. Reischauer Director MEMORANDUM November 16, 1993 TO: Interested Parties FROM: Ralph Smith % Bruce Vavrichek ) SUBJECT: The Minimum Wage and Family Incomes: An Update In response to recent requests, this memorandum updates two of the tables in the June 1986 CBO Staff Working Paper, The Minimum Wage: Its Relationship to Incomes and Poverty. Comparison of the new tables with the original ones suggests that little has changed between 1985 (the period referenced in the original analysis) and 1992-1993, apart from fluctuations which are probably explained by sampling variability. The new tables for 1993 and 1992 and the original ones for 1985 are attached. The new tables are based on the March 1993 Current Population Survey (CPS) and the March 1992 CPS, which reported wage rates paid in March of each year and family incomes in the preceding calendar year. The original tables, based on the March 1985 CPS, reflect wage rates paid in March 1985 and family incomes in 1984. The new tables focus on workers paid an hourly wage rate at or below $4.25, which has been the federal minimum wage rate since April 1991. The tables in the original working paper focused on workers paid at or below $3.35 per hour, which was the federal minimum wage rate at that time. The limitations described in the working paper apply to these tables as well. In particular, the information is only provided for workers who reported that they were paid on an hourly basis - about half of the workforce. Because the wage rate questions are only asked of about a quarter of the CPS respondents, the estimates are subject to relatively large sampling errors. In addition, the information on poverty pertains to incomes during the preceding calendar year, while data on wage rates refer to hourly wages paid in March of the given year. Thus, the relation between hourly wage rates and poverty can only be approximated.

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