Politics & Policies

Minimum Wage Job Impact in US – The results of the vast majority of analyses cluster around zero

Finally, I’m sure that this board has heard or will hear arguments that increasing the minimum wage in fast food will lead to job losses or slower job creation. There is an enormous body of literature on the effect of higher minimum wages on jobs. Figure B shows the results of a “meta-study,” a study of studies, of 64 research papers on the minimum wage between 1972 and 2007. The X-axis shows the effect on employment resulting from a minimum wage increase; the Y-axis shows the statistical rigor of the study. As you can see, the results of the vast majority of analyses cluster around zero, and those with the highest statistical power—i.e., the most rigorous studies—all fall on the zero line.

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There have also been other highly rigorous papers published since 2007 confirming this finding—including one that examined what happened at the county level after every single minimum wage increase in the United States from 1990 to 2006, concluding that there were “strong earnings effects and no employment effects from a minimum wage increase.”

This was also the conclusion of more than 600 Ph.D. economists, including seven Nobel Prize winners, who sent a letter to Congress last year encouraging them to raise the federal minimum wage.10 The letter states: “In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”

This is not to say that the minimum wage in fast food could be raised infinitely high overnight, but it should make clear that business’ ability to accommodate higher wage floors has always been far greater than they or their advocates will admit. In fact, a recent paper by researchers at the University of Massachusetts outlines how the fast food industry specifically could absorb a $15 minimum wage within a reasonable timeframe without reducing employment or average firm profitability.11

Chosen excerpts by Job Market Monitor. Read the whole story at Testimony before the New York State Department of Labor Wage Board: Hearing on Increasing the Minimum Wage in the Fast-Food Industry | Economic Policy Institute.

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