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Saturday, October 22, 2016

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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  • Dominick Vila

    The clearest evidence against the claims that raising the minimum wage would impact our economy is the fact that the minimum wage in most industrialized countries is higher than ours, that the economy in countries like Germany and Australia, for example, was barely affected by the the global recession, that companies in those countries are posting hefty profits and growing, and that the standard of living in those countries is higher than ours, at least in part, because all workers earn livable wages.
    The greatest irony is that our ridiculous minimum wage, which results in millions of Americans living below the poverty line, is actually a burden on our government and our economy. The famous “handouts” that many Americans get are not the result of people being lazy and spending the time drinking or watching TV, the reason they have no choice but to apply for government help is to satisfy the most basic needs a worker in the richest country in the world should expect and needs to survive.
    Add to all this that higher disposable income translates to higher spending, which contributes to company profits and growth, as well as job creation, and raising the minimum wage is a no brainer. Unless you are a Republican determined to keep the economy shaky and people struggling to gain seats in Congress and in gubernatorial races.

    • dana becker

      People don’t think for themselves and are biased so when reality does not coincide with their views, they don’t want to rethink their positions but instead cling to them even harder.

      Obama was right with the Bibles and Guns comment.

  • dana becker

    I happened to catch the “Roosevelts” last night on PBS. Episode 5 and wow what an amazing piece of work. It is also a snap shot of what is happening now showing that history is repeating itself with the inequality issues. People of all persuasions should watch this riveting documentary.

  • misadventures-of-Scatman

    “In the 13 states that boosted their minimums at the beginning of the year, the number of jobs grew an average of 0.85% from January through June. The average for the other 37 states was 0.61%.” – USA Today article

    Wow, what a HUGE difference! What is missing is the difference in Part-Time vs. Full Time growth.