Is minimum wage a job crusher or a job creator?
Neumark and Wascher reviewed previous research on the minimum wage and concluded that most studies since the early 1990s had shown that raising the minimum wage meant fewer jobs for low-skilled workers.
But in 2013, John Schmitt, a senior economist at the Center for Economic and Policy Research, reviewed literature—including Neumark and Wascher’s research, making his a study of studies of studies—since 2000 and came to the opposite conclusion. “The weight of that evidence points to little or no employment response to modest increases in the minimum wage,” he wrote. In other words, raising the minimum wage doesn’t cost jobs. Nor does it spur job creation.
In fact, a key presidential adviser has examined the issue and argued that very point in a research paper written before he joined the administration. Alan Krueger, head of Obama’s Council of Economic Advisers, and his then-Princeton colleague David Card surveyed hundreds of fast-food restaurants in New Jersey and Pennsylvania to see whether a recent increase in New Jersey’s minimum wage led to fewer jobs for workers in that state compared with their counterparts in neighboring Pennsylvania. Krueger and Card concluded there was no evidence that higher minimum wages reduced employment in a study that is still cited today.
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Really?
If it doesnt have any effect, just raise it to a million dollars and everything will be fine…right?
I mean if raising it has no impact on job creation….why stop at $9?
ChrisL on February 15, 2013 at 10:13 AM
Try no minimum wage, and see what happens.
OldEnglish on February 15, 2013 at 10:14 AM
A 24% increase can be hardly considered a “modest” increase.
jdpaz on February 15, 2013 at 10:17 AM
We should set the minimum wage to 250k, if we did that then everyone would be rich, have to pay their fair share, and be taxed accordingly.
Then, with all that tax money, we can finally do what needs to be done. Banning assault jobs with high capacity bonuses.
Gatsu on February 15, 2013 at 10:17 AM
Americans standing next to illegals in the parking lots at Home Depot.
MelonCollie on February 15, 2013 at 10:24 AM
It’s a fantastic job creator…
…for the illegal aliens.
0bama needs to pack the country with illegals before he gets his amnesty, what better way than this?
Rebar on February 15, 2013 at 10:25 AM
Forgot where I read it, but this study from 1994 has been debunked repeatedly. After a quick search I found this:
visions on February 15, 2013 at 10:28 AM
That’s the wrong question. “Why should the govt. interfere with a private agreement between me and my workers at my private business?” is a better question.
And unlike govt. regulations, if my workers don’t like that agreement, they’re perfectly free to disregard that agreement, leave my employ, go start their own concern, and pay whatever they wish.
Six months on, let me know how that works out for ya.
locomotivebreath1901 on February 15, 2013 at 10:31 AM
Don’t talk economics with someone who doesn’t know jack about it but is instead concerned about “feelings”, you will only get heartburn.
Bishop on February 15, 2013 at 10:32 AM
The government forcing business to pay people with ZERO skills more money than their labor is worth is counter-productive. These people eventually realize they don’t have to work hard or improve their skill set or education … they just have to complain and vote for democrats.
In the long run they never get ahead because all costs are eventually passed onto the consumer, which includes the minimum wage worker.
The minimum wage worker will never get ahead, and will probably get poorer, but the democrat politicians will become more powerful and wealthier. It’s in their interest to keep people below the poverty level, unskilled and uneducated.
darwin on February 15, 2013 at 10:35 AM
Much better that they be standing in the unemployment line?
ChrisL on February 15, 2013 at 10:36 AM
Shouldn’t need to – there would be more jobs available.
OldEnglish on February 15, 2013 at 10:36 AM
Pair this with the increased costs of the payroll taxes and health care taxes that Obama’s been piling on, and you’re going to get fewer people hired.
In addition, this move incentivizes businesses to hire illegal immigrants and pay them under the table. That way they don’t have to pay any of the extra taxes Obama’s hoisting upon them.
Someone needs to tell Democrats that the more it costs to have an employee, the less employees a business is likely to have.
I mean, we all can’t work for the government…
Nethicus on February 15, 2013 at 10:41 AM
There should be no federal minimum wage.
Nick_Angel on February 15, 2013 at 10:40 AM
Nick_Angel on February 15, 2013 at 10:42 AM
Our embassies should be better protected.
Bishop on February 15, 2013 at 10:47 AM
That bad, huh?
OldEnglish on February 15, 2013 at 10:49 AM
Try telling that to the millions of out-of-work teens that cannot find a job.
RoadRunner on February 15, 2013 at 11:19 AM
The Laws of Supply and Demand dictate that minimum wage laws cause unemployment.
The Monster on February 15, 2013 at 11:22 AM
“From each according to their ability, to each according to their need”–B. Hussein Obama
Stu Gotts on February 15, 2013 at 11:32 AM
Teehee
Nick_Angel on February 15, 2013 at 11:36 AM
Make $20/hour the minimum and maximum wage, no salaries. Everyone gets paid the same.
SC.Charlie on February 15, 2013 at 11:57 AM
I propose the “President Obama is an Economic Illiterate Act“, which calls for a federally mandated $90/hr minimum pay rate. Pass it through the House the Senate or Obama kill it and have them explain why $9/hr will stimulate the economy but $90/hr will not.
crrr6 on February 15, 2013 at 12:06 PM
Small businesses and retail jobs actually add jobs quicker in states with higher minimum wages, as opposed to those with lower minimum wages. In fact, in a real world example, Washingtons higher minimum wage actually drew low-skill work out of Idaho, which was forced its businesses to raise wages to compete.
It always seems to me like the “anti-minimum wage” side of this uses detached from reality logic with no actual, hard data to back up its points (the only “study” I’ve seen was the one referring to an increase in black unemployment, but I couldn’t find methodology and it contradicted every other study with available methodology I’ve read).
Besides, from what I understand, the logic is “an increase in minimum wage decreases jobs because it forces businesses to pay labor more than what it’s worth”. Now we consider that minimum wage has drastically decreased, adjusted for inflation, over the past 2 decades. Putting the two ideas together, wouldn’t it stand to reason that businesses would have either A) increased employment or B)lowered prices? Yet, in reality, just the opposite has happened. What gives?
Rainsford on February 15, 2013 at 12:28 PM
I read the Krueger and Card study in the 1990′s. It was looking at what happened in NJ and PA after one of the states raised the minimum wage. At best, it would be anecdotal evidence against the facts of economic reality, but there are several reasons why it fails to even be a good anecdote. The only reason anyone has ever heard of it is that it came to the conclusions that the Left wants.
thuja on February 15, 2013 at 12:28 PM
Oh I forgot to include, the basic economic logic is that you get a more motivated workforce that is more expensive to turn-over, therefore you get higher-quality work and saved employer costs due to longer worker retention. Again, aside from the “minimum wages are racist theory” (which mostly boil down to “blacks don’t work as hard”), there’s no economic argument against having a full-time, minimum wage above the poverty level.
Rainsford on February 15, 2013 at 12:30 PM
Further proof that studies are worthless because people don’t approach them with scientific objectivity, but with an aim toward fitting the data to support a pre-formed conclusion. The most obvious casualty of this malfeasance is scientific inquiry – because nobody but nobody with any objectivity or scientific curiosity can possibly believe anyone’s findings anymore. Instead, all data must be reviewed de novo by each individual so that he might arrive at his own conclusion. Science is dead. But ScienceTM (i.e., propaganda given legitimacy through the appearance of being under the auspices of science) lives on.
besser tot als rot on February 15, 2013 at 12:38 PM
Ok, let’s say you’re a Hooters franchisee. I just passed the President Obama is an Economic Illiterate Act, which requires a federal minimum $90/hr, in addition to the health care you will now have to pay for if you give them 40 hours of work under Obamacare.
The reality is you’ll probably hire a couple more part-time workers to keep them to a 39.5 hr max. But, the burnout rate is going to be high when people realize they’re going to have to now have to do the job of about 4-5 people while you jack up your wing and beer prices and hope customers still walk in the door.
Now, what is the argument that a small pay bump will produce a stimulative effect but a large one will probably shutter the business? There are 3-4M people making minimum wage – how is this supposed to help the economy? If this is supposed to be tonic for a languishing economy, why is Obama proposing it in year 5 of his presidency?
crrr6 on February 15, 2013 at 12:43 PM
Singapore has no minimum wage and unemployment is <5%. Just sayin…
Get the government out of regulating businesses and let the free market work.
You know how much regulators, bureaucrats, and OSHA have costs small businesses?
It takes a year get all the permits to open a business in some cities/states. In Singapore, you can get all the permits you need in less than a week.
nazo311 on February 15, 2013 at 1:26 PM
Let’s see. The first report you cite is from the Center for American Progress. I’m sure I could find something from Heritage or Cato that would state the exact opposite. Oh, who to believe? The second report largely focuses on comparing growth between states with minimum wages higher than the federal level and those at the federal level. Not only are there a variety of differences between such states, growth is meaningless measure without context. An A student doesn’t have as much room for growth as an F student. You have to know where they started from and what the growth rate was before changes in the minimum wage occurred. Maybe they cover that; I don’t have time to read the whole thing.
Finally, the New York Times article is kind of “meh”. Both states were doing well economically at the time, both were adding jobs, and the article largely focused on teenagers traveling across the border for work. Whatever reasons there might be for me to support an increase in the minimum wage, higher pay for teenagers is not among them.
Mullaney on February 15, 2013 at 1:48 PM