Welfare Reform on the Web (June 2011): Minimum Wage - overseas

State minimum wage differences: economic factors or political inclinations?

W.F. Ford, T. Minor and M.F. Owens

Business Economics, vol. 47, 2012, p. 57-67

This paper explores the political and economic factors that influenced a US state's decision to set its minimum wage rates above the level laid down in federal legislation over the two federal minimum wage cycles that span from 1991 until 2006. Results indicate that political leanings are the primary factor in explaining differences in minimum wage laws, so that states with liberal voting records are more likely to have a higher-than-federal minimum wage. However, there is little evidence in the data linking cost of living considerations to state minimum wage legislation, so that cost of living factors do not have any statistically significant influence on a state's decision to increase its minimum wage above the federal level.