Minimum wage debate moves to the states.

Congress last raised the federal minimum wage in 1991. Since that time, the cost of living has risen by more than 11 percent, the purchasing power of the $4.25 an hour federal minimum rate dropped to its lowest level in four decades and the full-time gross income of a minimum wage employee dipped well below the poverty line.

Despite these changes, Washington seems unlikely to alter the federal minimum wage before the next century. Although President Clinton recently promised to raise the rate 90 cents an hour, his proposal has met stiff resistance in Congress. Both Republicans and Democrats are steering clear of the proposal.

House Majority Leader Dick Armey vowed he would oppose any minimum wage bill with "every fiber of my being," and that seems to be the theme for other Republicans wary of alienating business. Many Democrats fear the minimum wage issue could turn into a political burden. "It's anachronistic, it's a loser, it's got no bite from the middle class and it screams old Democrat," says Al From of the Democratic Leadership Council.

Faced with such long odds in Washington, labor advocates have turned to the states. In 1995, at least 24 states considered proposals to increase their state minimum wage requirements. As of mid-March, at least 18 states have introduced legislation this session to increase state minimum wage laws, and initiative and referendum movements are proceeding across the country.

This focus on state minimum wage laws has several important implications. First, state action has provided the data to dramatically alter traditional minimum wage arguments. The classic minimum wage debate weighs the welfare of hourly employees from increased income against a potential loss of jobs brought on by additional costs to employers. Recent studies by economists David Card and Alan Krueger suggest...