An investigation to determine the effects of minimum wage legislation on the Virginia laundry and drycleaning industry

Abstract

The purpose of this investigation is to determine the effects the 1966 amendment to the Fair Labor Standards Act will have on the newly covered Virginia Laundry and Drycleaning Industry. Specific information is presented regarding the nature and magnitude of the changes which occurred in (1) employment; (2) wages; (3) scheduled weekly hours; (4) prices; (5) productivity; (6) types of services offered; (7) the extent of mechanization; and (8) plant size and organization.

Data for the study is derived from responses of 35 firms to a mail questionnaire submitted to 131 firms. The tabulated responses provided estimates of the changes attributable to minimum wage legislation.

The major findings are clearly consistent with the economic theory of the firm in that the minimum wage legislation produced unemployment and higher prices in the industry. Compulsory over-time pay caused reductions in scheduled weekly hours of work. Some offset to these adverse effects resulted from a stimulated improvement in the efficiency of the affected ·firms.

The findings of this study suggest that further increases in minimum wage rates will accelerate the decline of the laundry trade and hinder the growth of the drycleaning industry.