Difference between revisions of "Myths/raising the minimum wage hurts jobs"
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{{hdr/myth|Raising the minimum wage will result in higher unemployment rates.}} | {{hdr/myth|Raising the minimum wage will result in higher unemployment rates.}} | ||
| + | ==Myth== | ||
| + | There is a widespread belief that raising the {{l/ip|minimum wage}} leads to loss of jobs and higher unemployment. A more extreme version holds that {{l/sub|eliminating}} minimum wage would lead to more employment. | ||
==Reality== | ==Reality== | ||
| + | There are (at least) two parts to the reality of this myth: | ||
| + | * It misses the point. | ||
| + | * It's not even true. | ||
| + | ===Missing the Point=== | ||
| + | The point of employment as a social institution is twofold: | ||
| + | * to keep society operating, i.e. provide all the goods and services necessary for everyone to live at an acceptable level | ||
| + | * to distribute those goods and services in a reasonably equitable way | ||
| + | |||
| + | When a worker's wages fall below the level necessary to provide them with a reasonable living, then this arrangement fails on both counts. | ||
| + | ===Not Even True=== | ||
The most pessimistic credible study I could find comes from the Congressional Budget Office, which [[issuepedia:2014/02/The Effects of a Minimum-Wage Increase on Employment and Family Income|concluded in February 2014]] that increasing the minimum wage would have two primary effects on low-wage workers: | The most pessimistic credible study I could find comes from the Congressional Budget Office, which [[issuepedia:2014/02/The Effects of a Minimum-Wage Increase on Employment and Family Income|concluded in February 2014]] that increasing the minimum wage would have two primary effects on low-wage workers: | ||
# most would receive higher pay, which would elevate some of them above the poverty level | # most would receive higher pay, which would elevate some of them above the poverty level | ||
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* A comparative study of states that raised their minimum wages to be higher than that of their neighbors found [http://www.eoionline.org/issues/minimum-wage/was-minimum-wage-helps-workers-doesnt-hurt-business/ no movement of jobs] from the former to the latter | * A comparative study of states that raised their minimum wages to be higher than that of their neighbors found [http://www.eoionline.org/issues/minimum-wage/was-minimum-wage-helps-workers-doesnt-hurt-business/ no movement of jobs] from the former to the latter | ||
==Summary== | ==Summary== | ||
| − | While there is plenty of debate on this subject, all the real evidence supports one side of it: '''raising the minimum wage doesn't have any clear effect on | + | While there is plenty of debate on this subject, all the real evidence supports one side of it: '''raising the minimum wage doesn't have any clear effect on the employment rate.''' |
==Links== | ==Links== | ||
===Evidence=== | ===Evidence=== | ||
Revision as of 20:20, 7 March 2015
| Myth: Raising the minimum wage will result in higher unemployment rates. |
Myth
There is a widespread belief that raising the minimum wage leads to loss of jobs and higher unemployment. A more extreme version holds that eliminating minimum wage would lead to more employment.
Reality
There are (at least) two parts to the reality of this myth:
- It misses the point.
- It's not even true.
Missing the Point
The point of employment as a social institution is twofold:
- to keep society operating, i.e. provide all the goods and services necessary for everyone to live at an acceptable level
- to distribute those goods and services in a reasonably equitable way
When a worker's wages fall below the level necessary to provide them with a reasonable living, then this arrangement fails on both counts.
Not Even True
The most pessimistic credible study I could find comes from the Congressional Budget Office, which concluded in February 2014 that increasing the minimum wage would have two primary effects on low-wage workers:
- most would receive higher pay, which would elevate some of them above the poverty level
- some jobs would probably be eliminated
It should be noted that the minimum wage, which (as of 2014) has not been raised or even adjusted for inflation since 2007, is not adequate to keep most workers out of poverty. They therefore rely either on government assistance or on working multiple jobs, which is unhealthy for the worker, increases strain on families, and decreases the job supply.
In other words, a job that doesn't pay enough to live on isn't really worth having.
More significantly, it appears that the CBO model may be too pessimistic:
- San Jose raised their minimum wage in 2013, resulting in a decrease in unemployment and many other benefits to the local economy.
- The US Department of Labor says that "A review of 64 studies on minimum wage increases found no discernable effect on employment. Additionally, more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in support of raising the minimum wage to $10.10 by 2016."
- A comparative study of states that raised their minimum wages to be higher than that of their neighbors found no movement of jobs from the former to the latter
Summary
While there is plenty of debate on this subject, all the real evidence supports one side of it: raising the minimum wage doesn't have any clear effect on the employment rate.
Links
Evidence
- 2014-03-15 Minimum Wage In Washington: After 16 Years, State With Highest Minimum Wage Maintains Lower Unemployment Than National, Regional Averages.
- 2014-01-08 Raising minimum wage doesn’t affect employment, in 3 charts (and 2 McDonald’s meals)
Counterevidence
- 2014-10-16 If Minimum Wage Is So Great, Why Cite Bogus Study? claims that the PA/NJ study was refuted by a follow-up study, but does not cite any sources. Also makes a lot of other bogus arguments.