Posted May 6, 2016
Washington, D.C. – A new look at U.S. employment data from 1938 through 2009 shows that employment levels usually increased after the federal minimum wage went up, contrary to opponents’ claims that the sky would fall. The new brief, released this week by the National Employment Law Project, provides a straight-forward fact-check of opponents’ perennial claims that raising the minimum wage costs jobs. It does so by looking at simple economic indicators such as total private sector employment, and employment in major low-wage industries – indicators that correspond to opponents’ predictions about how jobs and the economy will suffer when wages go up.
The NELP brief examined each of the 22 times Congress raised the federal minimum wage between 1938 and 2009, and looked at the indicators one year later. It shows that, in the substantial majority of cases, employment actually improved after Congress raised the wage.
“The fact that jobs usually go up, not down, after a minimum wage increase reveals how predictions that raises will cost jobs are rooted in ideology, not evidence,” said Paul Sonn, general counsel at the National Employment Law Project, one of the brief’s authors.
The brief shows that:
Other indicators were also positive:
NELP’s findings are in line with the bulk of modern minimum wage research indicating little adverse effect on jobs when the minimum wage goes up. As Goldman Sachs analysts summarized recently, “the economic literature has typically found no effect on employment [of recent U.S. minimum wage increases].”[i] This is illustrated by meta-studies that survey and pool the results from scores of minimum wage studies – and show that the overwhelming majority find little to no impact on employment when the minimum wage goes up.
The brief supplements that body of academic research by directly evaluating opponents’ rhetorical assertions about the impact of higher wages.
The minimum wage has been opposed by many business groups and conservative legislators since its inception – typically predicting economic catastrophe if wages are raised. As early as 1937, employer lobbyists warned, “We…know what has always happened when governments have tried to superintend the industry of private persons. The final result has always been distress, misery and despair.” And just this year, Senator Ted Cruz warned, “I think the minimum wage systematically hurts the most vulnerable…I think it’s a bad policy.”
DOWNLOAD THE BRIEF
[i] Daan Struyven & Alec Phillips, Goldman Sachs US Daily: Minimum Wage Hikes and Wage Growth, April 12, 2016.