This is one of many reasons that critics, including business groups like the U.S. Chamber of Commerce, the National Restaurant Association and many Republicans, oppose minimum-wage increases. The argument is that it will hurt the very people it was meant to help by forcing employers to cut jobs, raise prices or both. They point to studies that minimum-wage increases hurt teenagers, because young workers typically get minimum-wage jobs, which become scarce when employers are forced to raise salaries.
But a wave of new
economic research is disproving those arguments about job losses and youth employment.
Previous studies tended not to control for regional economic trends that were already affecting employment levels, such as a manufacturing-dependent state that was shedding jobs. The new research looks at micro-level employment patterns for a more accurate employment picture.
The studies find minimum-wage increases even provide an economic boost, albeit a small one, as strapped workers immediately spend their raises. A 2011
paper by economists at the Federal
Reserve Bank of Chicago
found that a $1 minimum-wage increase lifts household income by about $250 and increases spending by about $700 a quarter in the following year. The spending increase is driven by a small number of households that primarily buy vehicles.
No Employment Effects
A team of economists, led by Arindrajit Dube of the University of Massachusetts-Amherst,
compared employment levels in contiguous areas with disparate minimum-wage levels over a 16-year period and concluded in a 2010 paper there are “strong earnings effects and no employment effects of minimum wage increases.”
Facebook
Twitter