Sociology 441: Stratification

The minimum wage as a cause of growing inequality

Evidence: time trends

Danziger and Gottschalk note that "The real value of the minimum wage steadily eroded from [1978] until 1990... This erosion may have been partially responsible for the increase in inequality of earnings during the 1980s. (p.129)" Their Figure 7.1 plots the two contrasting trends of a falling minimum wage and a rising 90:10 wage gap during the 1980s. Before then, the minimum wage appears to be fairly steady (even if bouncing around somewhat from year to year); wage inequality was also steady before the 1980s. So in both periods, the two time trends mirror each other.

But longer time trends call this evidence into question. Since Danziger and Gottschalk wrote their book, Congress has raised the minimum wage during the 1990s (at least enough to keep up with inflation). But wage inequality continues to grow. If a higher minimum wage were an important cause of equality, then rising inequality should have ended in the 1990s. It didn't.

Moreover, the minimum wage was rising in the 1950s and 1960s (see the trends), but wage inequality did not fall then. Inequality was barely changing throughout the third quarter of the century. So, while the wage trends mirror inequality trends during the 1970s and 1980s, that is the only time the two trends move in opposite directions.

Time trends will be one of our main tools to evaluate causal theories about stratification systems. See the discussion.