10.2190/CN.32.1.c K148138375537463 2 Increasing the Federal Minimum Wage: An Implications Side-Bar for "Mom and Pop" Employers 19 31 20080429 20080429 20080429 20080429 K148138375537463.pdf http://baywood.metapress.com/link.asp?target=contribution&id=K148138375537463 1 James S. Moore Indiana University, Purdue University Fort Wayne This article examines the implications of increasing the federal minimum wage in the labor market typically frequented by the entrepreneur and small business owner/operator. As employers, these firms are often heavily dependent upon unskilled/inexperienced workers to provide their goods and services in relatively competitive markets. When confronted with mandated increases in their wage expenses, such small businesses have limited flexibility in adapting to these interventions. The long-run implications of such wage floors will likely be quite distinct from their near-term counterparts. The bottom-line for the "mom and pop" employer may simply be that, unless the added labor expense can be passed on to the firm's customers, the ultimate result of the minimum wage increase is a reluctant curtailment of unskilled labor hours hired and, consequently, either the owner/operator spends more time working <i>in</i> the business or the scale of the operation contracts. Y. Brozen and M. Friedman, <i>The Minimum Wage—Who Really Pays? An Interview</i>, The Free Society Association, Washington, D.C., p. 2, 1996. D. Card and A. Krueger, <i>Myth and Measurement: The New Economics of the Minimum Wage</i>, Princeton University Press, Princeton, New Jersey, 1995. G. Stigler, The Economics of Minimum Wage Legislation, <i>The American Economic Review</i>, 36, 358-365, 1946. J. Peterson, Employment Effects of Minimum Wages 1938-50, <i>Journal of Political Economy</i>, LXV, 412-430, 1957. D. Kaun, <i>Economics of Minimum Wage—The Effects of Fair Labor Standards Act 1945-60</i>, Ph.D. thesis, Stanford University, 1963. Y. Brozen, The Effect of Statutory Minimum Wage Increases on Teenage Employment, <i>Journal of Law and Economics</i>, XII, 109-123, 1969. J. Peterson and C. Stewart, <i>Employment Effects of Minimum Wage Rates</i>, American Enterprise Institute for Public Policy Research, Washington, D.C., p. 114, 1969. T. Moore, The Effect of Minimum Wages on Teenage Unemployment Rates, <i>Journal of Political Economy</i>, LXXIX, 897-902, 1971. J. Kau and M. Kau, Social Policy Implications of the Minimum Wage Law, <i>Policy Sciences</i>, 4:1, 21-27, 1973. C. Brown, C. Gilroy, and A. Kohen, The Effect of the Minimum Wage on Employment and Unemployment, <i>Journal of Economic Literature</i>, 20:2, 487-528, 1982. D. Neumark and W. Wascher, Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment, <i>The American Economic Review</i>, 90:5, 1362-1396, 2000. D. Card and A. Krueger, Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply, <i>The American Economic Review</i>, 90:5, 1397-1420, 2000. D. Card and A. Krueger, Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania, <i>The American Economic Review</i>,84:4, 772-793, 1994. W. Wessels, A Reexamination of Card and Krueger's State-Level Study of the Minimum Wage, <i>Journal of Labor Research</i>, 28:1, p. 135, 2007. A. Manning, The Real Thin Theory: Monopsony in Modern Labour Markets, <i>Labour Economics</i>, 10:2, 105-131, 2003. W. Boal and M. Ransom, Monopsony in the Labor Market, <i>Journal of Economic Literature</i>, 35:1, 86-112, 1997. G. Van den Berg and G. Ridder, An Empirical Equilibrium Search Model of the Labor Market, <i>Econometrica</i>, 66:5, 1183-1221, 1998. D. Aaronson and E. French, <i>Output Prices and the Minimum Wage</i>, Employment Policies Institute, Washington, D.C., 1-17, June 2006. Available online: www.EPIonline.org <a target="_blank" href='http://www.EPIonline.org'>www.EPIonline.org</a> Automatic Data Processing, Inc., to access current minimum wages by state; <a target="_blank" href='http://complianceconnections.adp.com/toolbox/statetaxes/2008fastwagetaxfacts.gspx'>http://complianceconnections.adp.com/toolbox/statetaxes/2008fastwagetaxfacts.gspx</a>