A higher minimum wage not only boosts workers’ incomes—something that is sorely needed to boost demand and get the economy going—but it also reduces turnover and shifts businesses toward a high-road, high-human-capital model.
Still, some policymakers may be nervous about increasing the minimum wage while unemployment is so high. Yet, both the federal and states governments have raised the minimum wage numerous times during periods of high unemployment and the evidence indicates that employment has been unaffected.
A significant body of academic research has found that raising the minimum wage does not result in job losses even during hard economic times. There are at least five different academic studies focusing on increases to the minimum wage—including increases ranging from 7 percent to 12.3 percent made during periods of high unemployment—that find an increase in the minimum wage has no significant effect on employment levels. The results are likely because the boost in demand and reduction in turnover provided by a minimum wage counteracts the higher wage costs.
Similarly, a simple analysis of increases to the minimum wage on the state level, even during periods of state unemployment rates above 8 percent, shows that the minimum wage does not kill jobs. Indeed the states in our simple analysis had job growth slightly above the national average.
In our analysis we reference five academic studies of the minimum wage that include periods of high unemployment, cover different geographical areas and different time periods, and use a range of methodologies—from small case studies to large econometric analysis—lending great credibility to their findings…
Source: The Facts on Raising the Minimum Wage When Unemployment Is High.
Pingback: Tyrants and Human Nature – John Malcolm - July 18, 2012
Pingback: US / Domestic workers barely make minimum wage « Job Market Monitor - November 27, 2012
Pingback: US / Minimum wages raises will benefit nearly 1 million workers in 10 States reports National Employment Law Project « Job Market Monitor - December 21, 2012
Pingback: US / Top Miminum Wage will rise by 1.2 Big Mac per week to $10.55 « Job Market Monitor - December 31, 2012
Pingback: The Economics of Minimum Wages – There has been a large shift in the weight of academic opinion | Job Market Monitor - May 20, 2014