The Fed Proves Raising the Minimum Wage Doesn’t Kill Jobs

The myth that raising the minimum wage kills jobs has proven to be wrong, again. A new report from the US Federal Reserve found that there is no link between raising the minimum wage and job loss.

The report compared low-wage leisure and hospitality workers in an area spanning the border of New York (which had raised its minimum wage) and Pennsylvania (which had not). The areas in each state were, by economic standards, virtually identical aside from the minimum wage hike.

The report found that wages for those workers in New York increased at more than twice the rate of their counterparts in Pennsylvania. Since New York started raising wages in 2013 from $7.25 to $15, New York hospitality workers earned 33% more. Even more importantly, it found that New York not only did not lose jobs as a result of the minimum wage increase, it actually gained jobs in the sector at a faster rate than Pennsylvania.

This shouldn’t come as a surprise. After all, we have significant evidence from other states and cities that show this type of result is what we should expect from minimum wage hikes.

In the 90s, economists compared fast food employment in New Jersey (which raised its minimum wage in 1992) and Pennsylvania, and found no evidence that New Jersey’s higher minimum wage had reduced employment. San Francisco and Santa Fe are large cities with two of the longest track records of minimum wages above the federal level, and multiple studies show that there are “no statistically significant effects on employment or hours (including in low-wage industries such as restaurants).” Even when looking at counties directly next to each other across state borders with different minimum wages, researchers found no evidence that restaurants or retail businesses employed fewer people in the higher-wage side of those state borders. 

A September 2018 study based on US Labor Department data on minimum wage increases above $10 an hour in Washington, Chicago, Seattle, San Francisco, Oakland, and San Jose showed that wage increases do not hurt job growth. The study found “no significant employment effects” in any of the 6 cities, and actually estimated that the wage increase could cause up to a 1.1 percent increase in job growth. And in Seattle, the first city in the country to raise its minimum wage to $15 an hour, data shows that restaurant employment actually increased by 24,000 (from 134,000 to 158,000 jobs) in the four years since the city raised its minimum wage.

Those are just a few examples. There are many more, and they all point to the same conclusion: 

Raising the minimum wage doesn’t lead to job loss.

Dozens of cities and states have independently raised their own minimum wages above the federal level: if a higher minimum wage truly hurt business, surely there would be some evidence.

But time and time again, areas that increased their wage floor have seen no jump in businesses shutting down or firing workers. It simply doesn’t happen. 

Our nation is currently experiencing a destabilizing level of economic inequality, the highest in almost 100 years. In 2015, the top 1% of families in the US earned, on average, 26.3 times as much income as the bottom 99%. The gap between the top 1% and everyone else has only grown since then. 

 Let’s be real – making $7.25 hour is not a livable wage for any American in 2019. We cannot continue to depend on the tale of trickle down economics to eventually ensure income equality. When workers do better, the economy does better. The myths against minimum wage simply don’t hold up, and it’s time to have the courage to ensure all workers make a livable wage. 




Related Posts