Voting on Minimum Wages: A Time-Series Analysis

Abstract

In a recent paper, Silberman and Durden (1976; hereafter S-D) examined economic factors associated with voting by representatives on changes in the minimum wage in 1973. They found, among other results, that the number of low-wage workers in a congressional district is positively associated with voting for higher minimum wages by representatives from the district. This result is somewhat surprising; in fact, S-D were unable to predict a priori the sign of this variable. As Browning (1975) has shown, since the late 1 960s there has been a substantial increase in transfers to lowincome persons, particularly in terms of income in kind. Thus, in 1973 the losses of those who became unemployed by higher minimum wages may have been relatively smaller than losses in earlier periods. This would have reduced the cost to low-wage workers of the "unemployment effect" (S-D, p. 321) and might have served to make such workers, net, more favorably disposed to passage of such laws. In addition, the 1964 Voting Rights Act enfranchised many blacks. Blacks are typically low-paid workers; thus, they would have strong interest in minimum-wage legislation. Time-series analysis should enable us to determine any changes in the influence of blacks on voting by representatives and thus enable us to ascertain if the Voting Rights Act has any influence on minimum-wage legislation. Possibilities of detecting such changes make time series a useful adjunct to cross-section analysis. This note is a time-series study of economic determinants of passage of minimumwage legislation. The econometric technique used is probit analysis. A (0, 1) variable is defined over all representatives, with 0 being a vote against the minimum wage and 1 being a vote in favor. In each year, we used the vote on final passage of the law rather than on amendments, for this enables us to compare votes and influences over time. We use all years in which there was an actual legislated change in the minimum wage; we omit years such as 1973 in which minimum wages were considered but not passed. (In 1973 the increase in the minimum wage was vetoed by the president.)