Texas Gov. Rick Perry (R) came out against a minimum wage during an appearance on CNN’s Crossfire Friday, arguing that government intervention leads to job reduction and increases regulatory burdens on businesses. “I don’t think — I don’t think it’s government’s business to be setting the minimum wage out there,” Perry said. “And even the CBO said if you want to get rid of a half a million jobs between now and 2016, raise the minimum wage.”
Perry’s comments come several days after the Congressional Budget Office (CBO) released a report projecting that raising the minimum wage could reduce total employment by about 500,000 workers, increase wages for 16.5 million people, and pull 900,000 people out of poverty. Some economist have challenged the report’s jobs findings, however, claiming that the analysis don’t represent modern economic consensus, which shows that raising the wage has a net zero effect on jobs.
Indeed, the Federal Reserve Bank of Chicago found that even when potential job losses are taken into account, an increase in the minimum wage to $9, as President Obama proposed in his 2013 State of the Union, would increase household spending by $28 billion, or 0.2 percent of GDP. That extra spending stimulates the economy, which can lead to more job growth.
Real world experience of state and local efforts to raise the minimum wage with the unemployment rate at 7 percent or more have also found that the rate actually declined 52 percent of the time and in a few cases remained unchanged.
Perry claimed that 95 percent of all the wages in Texas are above minimum wage, but the state leads the nation in the number and percentage of minimum wage jobs. Nationwide, American workers’ wages are growing at just 2 percent per year, the slowest rate since at least 1965.