2016 Postmortem

New data released by the Department of Labor shows that raising the minimum wage in some states does not appear to have had a negative impact on job growth, contrary to what critics said would happen.

In a report on Friday, the 13 states that raised their minimum wages on Jan. 1 have added jobs at a faster pace than those that did not. The data run counter to a Congressional Budget Office report in February that said raising the minimum wage to $10.10 an hour, as the White House supports, could cost as many as 500,000 jobs.

Since the passage of the Fair Labor Standards Act in 1938, business interests and conservative politicians have warned that raising the minimum wage would be ruinous. Even modest increases, they’ve asserted, will cause the U.S. economy to hemorrhage jobs, shutter businesses, reduce labor hours, and disproportionately cast young people, so-called low-skilled workers, and workers of color to the bread lines. As recently as this year, the same claims have been repeated, nearly verbatim.

Raise wages, lose jobs, the refrain seems to go.

If the claims of minimum-wage opponents are akin to saying “the sky is falling,” this report is an effort to check whether the sky did indeed fall. In this report, we examine the historical data relating to the 22 increases in the federal minimum wage between 1938 and 2009 to determine whether or not these claims—that if you raise wages, you will lose jobs—can be substantiated. We examine employment trends before and after minimum-wage increases, looking both at the overall labor market and at key indicator sectors that are most affected by minimum-wage increases. Rather than an academic study that seeks to measure causal effects using techniques such as regression analysis, this report assesses opponents’ claims about raising the minimum wage on their own terms by examining simple indicators and job trends.

And who decides what the perfect minimum wage ceiling should be ? why $15? Why not $24

President Obama announced that he's supporting a federal, inflation-adjusted minimum wage increase from $7.25 to $9.00 per hour. Even if he settles for $8 per hour, this seems irresponsible in light of our stubbornly slow economic recovery. But if the government is going to raise the minimum wage, why stop at such a low wage rate? If higher minimum wages are so wonderful, why don't we just raise the minimum wage to $50 or $100 per hour? I'll answer that and conclude with why I believe the assumption that employees need to be protected from employers, and the resulting legislation which places the primary responsibility for a successful employer-employee relationship on the employer, makes for less productive employees, and results in employees who stay and stagnate, instead of moving on to other jobs and responsibilities to earn more money, respect, or job satisfaction.

For the sake of argument, let's say that this figure is $7 per hour. Some employers will begin outsourcing certain jobs or tasks to other U.S. companies or overseas operations. Others will begin to reduce work hours or employees. Others will be less generous to existing employees in terms of pay raises or benefits. Others will begin relying more on mechanical or technological methods, because long-term, the expense of these methods now makes sense in the face of rising wages. Others will be less willing to hire those with no job experience or skills (students and the undereducated poor, for example), because these workers, at least for a while, are not very productive and certainly aren't worth the higher wages, benefits, and risk of lawsuit. The effects aren't always immediately apparent, but long-term, a high enough minimum wage level will start to have a negative effect on jobs.