There’s more real life evidence that a higher minimum wage may not be harmful for job creation.
In their new analysis of small businesses and job growth, Paychex and IHS report that Washington, the state with the highest minimum wage, topped the list for the biggest increase in small business employment, with jobs growing by 2.22 percent over the last year. The state’s minimum wage is currently $9.32, the highest in current law, although a handful of others have passed increases that will bring theirs higher.
When it comes to cities, the story is the same. San Francisco, which has the highest big city minimum wage at $10.74, was the city with the greatest growth in small business employment. Seattle, which currently follows Washington’s minimum wage, came in a close second.
Both Washington and Seattle are pushing for even higher minimum wages. Washington Gov. Jay Inslee (D) has proposed raising the wage to somewhere between $10.82 and $11.82. Seattle, meanwhile, appears to have a legislative agreement to raise its minimum wage to $15, which would be the highest in the country. San Francisco’s mayor also supports a higher wage for the city and offered some tepid support for the $15 level.
That city in particular has offered other real world evidence that a higher wage doesn’t necessarily bring economic area to an area. In the seven years after San Francisco increased its minimum wage in 2004, employment in the city grew by more than 5 percent while it fell in other Bay Area counties. Restaurant job growth was particularly strong, despite the strong opposition of large restaurant lobbying groups, increasing by 17.7 percent, faster than any other neighboring area. Washington has also seen positive trends in the 15 years after it increased its wage to a national high. Job growth has stayed steady at a 0.8 percent annual rate, higher than the national one, and employment at restaurants and bars grew by 21 percent.
And while the National Federation of Independent Business, which represents small businesses, vocally opposes increasing the minimum wage, its members actually ranked minimum wage issues at number 52 out of 75 total, while nearly 30 percent said it wasn’t even a problem.
There have been some studies that found a higher minimum wage will hurt job growth, such as a Congressional Budget Office report that estimated a $10.10 wage would reduce jobs by about 0.3 percent. But a different analysis of minimum wage increases at the state level over two decades didn’t find any clear evidence that they affected job creation, even when unemployment was high.