Tuesday , November 5 2024
Home / The Angry Bear / Evidence Shows Minimum Wage Increases Will Cause Job Losses is Largely Wrong-Headed

Evidence Shows Minimum Wage Increases Will Cause Job Losses is Largely Wrong-Headed

Summary:
Largely speaking direct labor is not the issue of costs have I have presented in another post. It is the overhead such as healthcare insurance which can better handled in another manner. Inflation grows and minimum wage income is stagnant. Studies have found little or no job loss due to Minimum Wage Laws, Economic Policy Institute There is always political heat around minimum wage increases, largely driven by concerns about job losses. The story goes, after a minimum wage increase many employers will not be able to afford to pay their workers the new higher minimum wage. They will then shrink their payrolls. If these job losses are large enough, they could even swamp the higher wages and lead to lower overall wage income for the entire group of

Topics:
Angry Bear considers the following as important: ,

This could be interesting, too:

NewDealdemocrat writes Real GDP for Q3 nicely positive, but long leading components mediocre to negative for the second quarter in a row

Joel Eissenberg writes Healthcare and the 2024 presidential election

NewDealdemocrat writes JOLTS report for September shows continued deceleration in almost all metrics, now close to a cause for concern

NewDealdemocrat writes Repeat home sales accelerate slightly monthly, but continue to show YoY deceleration

Largely speaking direct labor is not the issue of costs have I have presented in another post. It is the overhead such as healthcare insurance which can better handled in another manner. Inflation grows and minimum wage income is stagnant.

Studies have found little or no job loss due to Minimum Wage Laws, Economic Policy Institute

There is always political heat around minimum wage increases, largely driven by concerns about job losses. The story goes, after a minimum wage increase many employers will not be able to afford to pay their workers the new higher minimum wage. They will then shrink their payrolls. If these job losses are large enough, they could even swamp the higher wages and lead to lower overall wage income for the entire group of affected workers.

This conclusion is strengthened by focusing on the studies that examine broad groups of low-wage workers or the overall workforce, not just narrow segments like teenagers. As the figure below shows, the median employment response is essentially zero among these more comprehensive studies, with 90% of these studies finding no or only small disemployment effects.

The new review standardizes the estimates of each study by measuring employment responses relative to how much actual wages rose as a result of minimum wage increases. Earlier reviews of minimum wage research often mixed different types of employment estimates and ignored how much the minimum wage was actually raising wages. The findings were difficult to interpret and not useful to those trying to predict the effects of a prospective minimum wage increase. In particular, these other reviews produced results that could not directly answer the question of whether any job loss they measured was very small or very large, or whether low-wage workers as a group saw increases in annual earnings after a minimum wage increase.

Evidence Shows Minimum Wage Increases Will Cause Job Losses is Largely Wrong-Headed

Minimum wage own-wage elasticity repository – OWE repository

1See Figure 7 of the review, which also shows that the median own-wage elasticity of employment for studies published between 2010 and 2024 is -0.04.

Leave a Reply

Your email address will not be published. Required fields are marked *