Studies: Increasing The Minimum Wage During Times Of High Unemployment Doesn’t Hurt Job Growth

A group of House Democrats recently proposed legislation that would raise the federal minimum wage to $10 an hour, roughly where it would have to be to match the peak buying power the wage reached in 1968. Cities and states across the country are taking action on their own, raising their minimum wages in an effort to help low-income workers.

Opponents of minimum wage increases contest that raising the minimum wage will be costly for businesses and have a negative effect on job growth and employment. An analysis by the Center for American Progress’ Nick Bunker, David Madland, and the University of North Carolina’s T. William Lester, however, found five recent studies showing that increasing the minimum wage — even during periods of high unemployment — does not have a negative effect on job growth:

A significant body of academic research has found that raising the minimum wage does not result in job losses even during hard economic times. There are at least five different academic studies focusing on increases to the minimum wage — including increases ranging from 7 percent to 12.3 percent made during periods of high unemployment — that find an increase in the minimum wage has no significant effect on employment levels. The results are likely because the boost in demand and reduction in turnover provided by a minimum wage counteracts the higher wage costs.

Similarly, a simple analysis of increases to the minimum wage on the state level, even during periods of state unemployment rates above 8 percent, shows that the minimum wage does not kill jobs. Indeed the states in our simple analysis had job growth slightly above the national average. […]


All the studies came to the same conclusion — that raising the minimum wage had no effect on employment.

While increasing the minimum wage likely has no effect on job creation, it does have a tangible benefit for workers. Eight states increased their minimum wage at the beginning of 2012, providing extra benefits to 1.4 million workers. More than half of the workers directly affected by a minimum wage increase, as well as more than half who would be indirectly affected, are women, meaning increasing the wage provides help to a segment of the population that already faces significant disadvantages in the workplace.