Study After Study Debunks Minimum Wage Myths

While it's likely Minnesota will increase the minimum wage before the federal government, a national wage increase could strengthen Minnesota law. At the state level, the senate passed legislation raising the wage from $7.25 to $7.75; the house passed a $9.50 wage indexed to inflation. When lawmakers meet again in late February, they're expected to figure out a compromise on the two figures.

Current congressional proposals, however, could boost the national minimum wage as high as $10.10 an hour, more inline with its 1960's purchasing power.

Congressional action is a long way off. Washington D.C. conservatives, including Minnesota's John Kline, refuse to raise the wage. Kline voted against a 2007 increase, saying on the House floor “the cruel irony of any minimum wage increase will be a loss of jobs. In 2012, when asked to support an increase, Kline said he “continued to oppose such a move.” In 2013 he said: “We need jobs out there. The best approach right now is to get federal spending under control and government out of the way of the nation's job creators.”

Study after study shows Kline is wrong. More on that later.

So, what is a reasonable minimum wage? Based on a 2010 report, the JOBS Now Coalition estimates the following wage levels for various groups to meet their minimum needs, assuming a 40 hour work week:

No doubt, these figures have increased since 2010. At $7.25, it is quite clear that the current state and federal minimum wage is not a living wage.

 The question quickly becomes: does a rise in the minimum wage adversely affect employment? Start with Oregon, which has one of the highest minimum wages in the country. Melvin Sickler, a representative of the National Restaurant Association, told Congress in March, 2013, that Oregon’s restaurants employed a reduced number of workers since the passage of the Oregon minimum wage.  In fact checking that statement, PolitiFact found that “restaurant jobs rise and fall with the health of the national economy, not the state’s minimum wage. Oregon’s per capita restaurant employment is higher than the national average, in spite of having a higher minimum wage.”

Professor Aridrajit Dube of Umass Amherst says: “The negative association between job growth and minimum wages is in the wrong place: it shows up in a sector like manufacturing that has few minimum wage workers, but is absent in low-wage sectors like food services and retail. In other words, it is likely a statistical artifact and not a causal relationship.”

John Schmit from the Center for Economic Policy and Research says: “The weight of [the] evidence points to little or no employment response to modest increases in the minimum wage…. Given the relatively small cost to employers of modest increases in the minimum wage, [several] adjustment mechanisms appear to be more than sufficient to avoid employment losses, even for employers with a large share of low-wage workers.”

Travis Waldron writing for says: “An analysis by the Center for American Progress’ Nick Bunker, David Madland, and the University of North Carolina’s T. William Lester, however, found five recent studies showing that increasing the minimum wage — even during periods of high unemployment — does not have a negative effect on job growth.” A 2013 survey by the University of Chicago business school, no bastion of liberal economic thinking, finds an overwhelming percentage of economists agrees with this proposition.

The Massachusetts Budget and Policy Center found: “Our analysis of job growth in Massachusetts over almost two decades—during which the state minimum wage increased several times—provides evidence that these increases have not impeded job growth"

Modest minimum wage increases do not have an adverse effect on employment. Conservative fear-mongering over this issue remains misplaced, and is designed to serve only that small part of their constituency that falls prey to such fallacy. It is time to raise the minimum wage.

Posted in Economic Development | Related Topics: Minimum Wage 

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