Remember when the right was convinced that raising the minimum wage would lead to disastrous job losses, all because of a Congressional Budget Office report that suggested President Obama’s plan to do so would cost the country jobs? It turns out that states that have upped their minimum wage are actually doing much better than states that haven’t.
A Center for Economic Policy and Research (CEPR) report released last week shows that in the 13 states that increased their minimum wage at the beginning of 2014, job growth was higher than in states that did not. Four states — Connecticut, New Jersey, New York, and Rhode Island — had passed legislation to raise the minimum wage, while nine — Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont and Washington — automatically did so due to inflation. The CEPR used the average of employment levels from the last five months of 2013 and compared them to the data from the first five months of 2014 to determine the rate of employment growth.
All but one of those states (New Jersey) saw an increase in employment. The average change for these 13 states was +0.99 percent, while the states that did not raise their minimum wages only had an average change of +0.68 percent. Four (Washington, Colorado, Oregon, and Florida) were in the top 10 states that had seen job growth, and nine saw growth above the median rate. New Jersey, however, is in the worst shape in the country, with an 0.56 percent decrease.
The report is an update on April figures from Goldman Sachs economists, which had also shown the benefits of raising the minimum wage. The author, Ben Wolcott, says the report doesn’t show that an increase necessarily creates jobs, but that it doesn’t have the negative effects on the economy that so many were concerned about.
“While this kind of simple exercise can’t establish causality, it does provide evidence against theoretical negative employment effects of minimum-wage increases,” he wrote.
Washington, which currently has the highest minimum wage ($9.32), saw the largest increase in small-business jobs in the nation. Of the four states that upped their minimum wage this year, Connecticut’s largest jumps were in professional and business services, New York’s were in private and educational health services, and Rhode Island’s were in manufacturing in March. Though New Jersey saw a decrease in overall job growth, its largest increase in jobs was in leisure and hospitality.
Ten other states have passed laws raising their minimum wage this year, with Massachusetts’ move to $11 per hour being the highest increase in the country. The effect on the economy as a whole remains to be seen. A federal minimum-wage hike will most likely not pass in a Republican-controlled House.
But this report makes it pretty clear that not only does a minimum-wage increase not have a negative impact on job growth, but it might actually help workers and businesses. It’s going to be harder and harder for Republicans to come up with excuses not to do it.
Below is the CEPR’s chart comparing states based on changes in job growth
AFP Photo/ Scott Olson
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