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#FightFor15 ignores 100 years of economic evidence on the minimum wage

(AP Photo/David Goldman)

(AP Photo/David Goldman)

The shockwaves that hit after minimum wage increases across the country could be brutal. Recent studies on the minimum wage make the artificial wage increase look costlier than the rosy future portrayed by supporters.

“Raising the minimum wage will cost jobs, particularly those held by the least-skilled. Economists have written scores of papers on the topic dating back 100 years, and the vast majority of these studies point to job losses for the least-skilled,” David Neumark wrote for The Wall Street Journal.

Neumark noted a study from Jonathan Meer and Jeremy west that found “the minimum wage reduces job growth over a period of several years.” Another research survey, conducted by Neumark and William Wascher, deputy director of the Federal Reserve Board of Governors, “generally found a 1 percent or 2 percent reduction for teenage or very low-skill employment for each 10 percent minimum-wage increase.”

Unskilled workers, the young, and industries with low-wage jobs are harmed the most by wage increases.

Sometimes, those effects can be minimal. The minimum wage only impacts a small percentage of American workers, and other business costs can make a small raise negligible. Economic studies analyze the isolated effects of the minimum wage, but the real-world decisions of employers are based on many costs. When the government mandates higher wages for workers, businesses have to get creative to stay competitive on top of the new regulations.

“Let’s not pretend that a higher minimum wage doesn’t come with costs, and let’s not ignore that some of the low-skill workers the policy is intended to help will bear some of these costs,” Neumark wrote.

No government decision is costless. Laws and regulations aren’t solutions so much as trade-offs. The goal is to make benefits outweigh costs. With the new demands for a higher minimum wage, a blind desire for “justice” and anti-poverty action has blinded supporters to economic fact. In many instances, the large increases in the minimum wage will have important, relevant costs. Dismissing those costs as non-existent does not usher in wise economic policy.


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