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The Economic Impact of a High National Minimum Wage: Evidence from the 1966 Fair Labor Standards Act

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  • Martha J. Bailey
  • John DiNardo
  • Bryan A. Stuart

Abstract

This paper examines the short and longer-term economic effects of the 1966 Fair Labor Standards Act (FLSA) which increased the national minimum wage to its highest level of the 20th Century and extended coverage to an additional 9.1 million workers. Exploiting differences in the “bite” of the minimum wage due to regional variation in the standard of living and industry composition, this paper finds that the 1966 FLSA increased wages dramatically but reduced aggregate employment only modestly. However, the disemployment effects were significantly larger among African-American men, forty percent of whom earned below the new minimum wage in 1966.

Suggested Citation

  • Martha J. Bailey & John DiNardo & Bryan A. Stuart, 2020. "The Economic Impact of a High National Minimum Wage: Evidence from the 1966 Fair Labor Standards Act," NBER Working Papers 26926, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26926
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    References listed on IDEAS

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    Cited by:

    1. Sebastian Link, 2019. "The Price and Employment Response of Firms to the Introduction of Minimum Wages," CESifo Working Paper Series 7575, CESifo.
    2. Demir, Gökay, 2023. "Labor Market Frictions and Spillover Effects from Publicly Announced Sectoral Minimum Wages," IZA Discussion Papers 16204, Institute of Labor Economics (IZA).
    3. Arindrajit Dube & Attila S. Lindner, 2024. "Minimum Wages in the 21st Century," NBER Working Papers 32878, National Bureau of Economic Research, Inc.
    4. Abhay Aneja & Guo Xu, 2020. "The Costs of Employment Segregation: Evidence from the Federal Government under Woodrow Wilson," NBER Working Papers 27798, National Bureau of Economic Research, Inc.
    5. Anna Godoey & Michael Reich, 2021. "Are Minimum Wage Effects Greater in Low‐Wage Areas?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(1), pages 36-83, January.
    6. Daniel Aaronson & Brian J. Phelan, 2020. "The Evolution of Technological Substitution in Low-Wage Labor Markets," Working Paper Series WP-2020-16, Federal Reserve Bank of Chicago, revised 01 Mar 2022.
    7. Demir, Gökay, 2022. "Labor market frictions and spillover effects from publicly announced sectoral minimum wages," Ruhr Economic Papers 985, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Marchingiglio, Riccardo & Poyker, Mikhail, 2024. "The Economics of Gender-Specific Minimum Wage Legislation," IZA Discussion Papers 17016, Institute of Labor Economics (IZA).
    9. Adnan Hamid & Hasbullah Hasbullah, 2021. "The Implementation of criminal sanctions as ius puniendi: A case study of entrepreneurs paying below the minimum wage in Indonesia," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(4), pages 535-548, June.
    10. Hampton, Matt & Totty, Evan, 2023. "Minimum wages, retirement timing, and labor supply," Journal of Public Economics, Elsevier, vol. 224(C).
    11. Popp, Martin, 2024. "Minimum Wages in Concentrated Labor Markets," IZA Discussion Papers 17357, Institute of Labor Economics (IZA).
    12. Clemens, Jeffrey & Strain, Michael R., 2021. "The Heterogeneous Effects of Large and Small Minimum Wage Changes: Evidence over the Short and Medium Run Using a Pre-analysis Plan," IZA Discussion Papers 14747, Institute of Labor Economics (IZA).
    13. Arindrajit Dube & Ben Zipperer, 2024. "Own-Wage Elasticity: Quantifying the Impact of Minimum Wages on Employment," NBER Working Papers 32925, National Bureau of Economic Research, Inc.
    14. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.
    15. Daniel Haanwinckel, 2023. "Does regional variation in wage levels identify the effects of a national minimum wage?," Papers 2307.01284, arXiv.org, revised Nov 2024.
    16. Ahn, Taehyun, 2024. "Minimum wage and self-employed business owners: Evidence from South Korea," Labour Economics, Elsevier, vol. 88(C).

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    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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