Minimum Wage Increases Equals Job Loss : States With Increaes / States Without

Who knew? This study is hashing over old ground again but with a little more insight. Raising the minimum wage results in loss of jobs and increases the unemployment rate. dah! This has been known ever since the debate started years ago because it hit the teen population the hardest, especially during the summer months. Now it hits families during a disastrous economic down turn.

Now it's not about the loss of jobs or unemployment hurting people, it's about increasing the pressure on the people that need jobs to survive to vote their stomachs. It's just politics and dirty politics at that, but who's counting the damage when elections are approaching and your party needs a handle to crush the opposition. What better way to do it then on the backs of the poor and the young.

Moral integrity in the face of election losses is a none issue. But then it was never a consideration to begin with.

How the Minimum Wage Increased Unemployment in 2013
Source: Ben Gitis, "How Minimum Wage Increased Unemployment and Reduced Job Creation in 2013," American Action Forum, March 30, 2014.

April 11, 2014

High state minimum wages increased unemployment by 747,700 workers, says Ben Gitis, a policy analyst at the American Action Forum.

• Five states approved minimum wage increases in 2013.
• Additionally, the District of Columbia, the airport zone SeaTac in Washington, and Montgomery County and Prince George's County (both in Maryland) also approved wage increases.

Gitis analyzed the impact of the minimum wage on employment -- how much does raising the federally-mandated wage affect the labor market? Because the 50 states have such variation in wage laws (19 states in 2013 had minimum wages above the federal $7.25 per hour), Gitis was able to compare these wage levels with unemployment and job creation.

• States with minimum wages above $7.25 per hour had, on average, higher unemployment and lower net job growth rates than other states.
• The average unemployment rate in the states above $7.25 per hour was 7.5 percent, compared to 6.4 percent in the $7.25 per hour states. Similarly, the average net job growth rate was 0.5 percent in the high wage states, compared to 0.8 percent in the $7.25 per hour states.

These differences are still small, though not unexpected because relatively few people actually earn the minimum wage. A better way to evaluate the wage's impact on employment is to look at its impact on low-skilled workers. A considerable portion of the low-skilled workers category is teenagers, who made up 24.2 percent of federal minimum wage workers in 2013.

• The average unemployment rate for teenagers (ages 16 to 19) was 22.5 percent in states with high minimum wages, compared to 20.5 in states with the $7.25 per hour minimum wage.
• The impact on job growth was even larger. The average net job growth rate for the high minimum wage states was negative, at -0.5 percent, while the growth rate for $7.25 per hour states was 1.8 percent. Teenage employment actually increased in the $7.25 per hour states.

Ultimately, Gitis determined that a $1 increase in the minimum wage increased the unemployment rate by 1.48 percent and led to a 0.18 percent decrease in the net job growth rate. For teenagers, the difference was even starker, with the additional dollar increasing teenage unemployment by 4.67 percent and decreasing the teenage job growth rate by 4.01 percent. In all he determined that high state minimum wages increased unemployment by 747,700 workers and reduced job growth by 83,300 jobs.