Compliance with the Minimum Wage : Can Government Make a Difference?

This paper examines patterns of compliance and noncompliance with federal minimum wage laws in the U.S. apparel industry and analyzes the impact of new methods of intervention designed to improve regulatory performance. Drawing on contractor-level data from a randomized survey of apparel contractors, the paper assesses the major correlates of compliance with minimum wage provisions of the Fair Labor Standards Act. It then evaluates the impact of agreements between manufacturers and the government used to monitor contractor behavior as a means of improving compliance outcomes. Non-compliance is significantly correlated with characteristics predicted by theory including employer size, skill content, and the elasticity of labor and product demand. Nonetheless, stringent forms of contractor monitoring are associated with significant reductions in the presence, incidence, and severity of violations of minimum wage standards