Saturday, September 20, 2014

Here's What Happened When 13 States Raised the Minimum Wage (Hint: Job Growth Didn't Implode)

Here's What Happened When 13 States Raised the Minimum Wage (Hint: Job Growth Didn't Implode)

Despite the rhetoric, minimum wage hikes has not cost jobs. (photo: Jobs with Justice)

By Danny Vinik, New Republic
16 September 14

It’s very rare these days to hear any good news about wages of low-income Americans. But Elise Gould, of the Economic Policy Institute, delivered exactly that in a report at the end of August.

Between the first half of 2013 and the first half of 2014, Gould found, the real wages of the bottom 10 percent of Americans grew 0.3 percent. That’s not much—in fact, it’s just a 2 cent increase in hourly pay—but every other decile saw their real wages fall during that period. That may be surprising. After all, the poorest workers generally see their wages stagnate, not rise. But there’s a good reason for why that trend reversed itself and it has to do with the minimum wage. Not the national minimum wage. Due to Republican obstruction, it remains stuck at $7.25. In the meantime, states have raised their own minimum wages—and that has made a difference for the poorest workers.

In 2014, 13 states raised their minimum wages, five through legislation and eight through inflation indexing. Gould compared wage growth for the bottom 10 percent of Americans in those 13 states with the rest of America. In the former, real wages grew 0.9 percent, a non-negligible increase. In the remaining 37 states, real wages declined 0.1 percent. In other words, wage growth for the bottom 10 percent of Americans is entirely attributable to states that increased their minimum wages.

That’s good news, but it’s not unexpected. Conservatives largely concede that raising the minimum wage increases wages. They oppose it, they say, because it will reduce job growth. So, did that happen in those 13 states? Jared Bernstein, the former chief economist for Vice President Joe Biden and a senior fellow at the Center for Budget and Policy Priorities, looked at the data. He found that job growth was higher in states that raised their minimum wages than it was in those that didn’t (1.8 percent versus 1.5 percent).

Bernstein is quick to point out the limitations of this data. “Now, these are all small changes and I wouldn’t make a federal case out of any of them,” he writes. But it’s also important to note that minimum wage hikes have not crippled job growth in those 13 states. When the Senate next votes on raising the national minimum wage—possibly in the next few weeks—that’s something Republicans should keep in mind.

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