During his State of the Union address last night, President Obama called for raising the minimum wage to $9 an hour, up from its current $7.25, and indexing it to inflation so that it rises as the economy grows. If the increase were to happen, it would give the minimum wage its highest purchasing power since 1981, lifting millions of families above the poverty line.
But top Republicans are already coming out against it. During interviews last night and today, House Budget Committee Chairman Paul Ryan (R-WI) and Sen. Marco Rubio (R-FL) both made clear that they oppose raising the minimum wage, citing its supposed effect on job creation:
RYAN: I think it’s inflationary. I think it actually is counterproductive in many ways. You end up costing job from people who are the bottom rung of the economic ladder. Look, I wish we could just pass a law saying everybody should make more money without any adverse consequences. The problem is you’re costing jobs from those who are just trying to get entry level jobs. The goal ought to be is to get people out of entry level jobs into better jobs, better paying jobs. That’s better education and a growing economy. Those are some of the things he talked about and I don’t think raising minimum wage — and history is very clear about this — doesn’t actually accomplish those goals.
RUBIO: I want to see people making a lot more than $9 an hour in the United States. And the way do you that is through rapid economic growth where people are being paid a lot more than that. $9 is not enough. I think we all would want that. The question is is a minimum wage the best way to do it? And history has said the answer is absolutely not. In fact, the impact of minimum wage usually is that businesses hire less people. That’s the impact of it. They’ll just hire less people to do the same amount of work…We have a lot of history to prove that the minimum wage , raising the minimum wage does not grow the middle class.
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In fact, the history says that raising the minimum wage has little if any impact on job creation. A study published in November 2010 in the Review of Economics and Statistics, for instance, found “no detectable employment losses from the kind of minimum wage increases we have seen in the United States.” Another published in 2011 “found no impact on hours worked or employment levels.”
The seminal study of the minimum wage, done by economists David Card and Alan Krueger, found that job creation was actually strengthened by an increase in the minimum wage. This result has been found time and time again. So Rubio and Ryan have the history exactly backwards: raising the minimum wage results in higher wages and more purchasing power for workers, not job losses.