Raising the minimum wage is one of many issues that will likely become a casualty of Congress’s inaction before the midterm elections. The Minimum Wage Fairness Act — which was introduced in November 2013 by Senator Tom Harkin (D-IA), and would raise the minimum wage from its current rate of $7.25 per hour to $10.10 over the course of a two-year period — is strongly supported by President Obama, the Democratic caucus, and a broad public majority. But it has almost no chance of becoming law anytime soon.
Republicans and some business groups argue that raising the minimum wage would reduce job growth by increasing the cost of hiring. Senate Minority Leader Mitch McConnell (R-KY) has spoken out against minimum-wage increases, saying that, “Kentucky’s got an unemployment rate above the national average. We’ve got a depression in the coal fields. Obamacare is destroying jobs right and left. We have a record number of part-time employees in our country as a result of Obamacare. The last thing, it seems to me, we ought to be doing is destroying jobs.”
McConnell’s argument seemed strengthened by a report from the Congressional Budget Office (CBO) earlier this year, which found that $10.10 per hour minimum wage could lead to the loss of 500,000 jobs nationwide. However, the statistics cited by many Republicans and anti-minimum-wagers do not tell the whole story. The 500,000 figure is a rough projection, and does not account for the millions who would directly benefit from a higher minimum wage.
More than 600 economists also disagree with McConnell, and signed an open letter asserting that most evidence backs the claim “that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”
According to new data released Friday by the U.S. Department of Labor, the economists are on the right track. As USA Today notes, the 13 states (Arizona, Colorado, Connecticut, Florida, Missouri, Montana, New Jersey, New York, Ohio, Oregon, Rhode Island, Vermont, and Washington) that raised their minimum wage at the beginning of the year are not losing jobs. Instead, most are adding jobs faster than those that didn’t increase the minimum wage. Of those 13 states, only Vermont has not seen growth—its employment rate has been flat.
While the report only examines six months of data, it presents a more optimistic view of minimum-wage increases than the grim picture Republicans are painting. As John Schmitt, a senior economist at the liberal Center for Economic and Policy Research, put it, “It raises serious questions about the claims that a raise in the minimum wage is a jobs disaster.” He concedes that the job data is not definitive, but believes it is “probably a reasonable first cut at what’s going on.”
It’s true that the Labor Department’s numbers do not establish a cause-and-effect relationship, and there are numerous reasons that hiring could accelerate in any particular state. But the findings offer hope that the main argument against the bill can be refuted.
Photo: pbarcas via Flickr
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