The experience of the 13 states that increased their minimum wage on January 1st of this year might provide some guidance for what to expect here in Washington, DC when the city-wide minimum wage increases to $9.50 on July 1.

At the beginning of 2014, 13 states increased their minimum wage. Of these 13 states, four passed legislation raising their minimum wage (Connecticut, New Jersey, New York, and Rhode Island). In the other nine, their minimum wage automatically increased in line with inflation at the beginning of the year (Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont, and Washington state).

As CEPR noted in March and April posts, economists at Goldman Sachs conducted a simple evaluation of the impact of these state minimum-wage increases. GS compared the employment change between December and January in the 13 states where the minimum wage increased with the changes in the remainder of the states. The GS analysis found that the states where the minimum wage went up had faster employment growth than the states where the minimum wage remained at its 2013 level.

When we updated the GS analysis using additional employment data from the BLS, we saw the same pattern: employment growth was higher in states where the minimum wage went up. While this kind of simple exercise can't establish causality, it does provide evidence against theoretical negative employment effects of minimum-wage increases.

In this post, we can now bring these figures up to date with the data from April and May.

The chart below shows the percentage change in employment for each state. The baseline is the average of the employment figures for the last five months of 2013 (August to December), which is measured against the average of the employment levels for the first five months of 2014 (January to May). As was the case with the earlier analyses by GS and CEPR, employment growth is still faster in states where the minimum wage went up.

wolcott-2014-06-30

Of the 13 states that increased their minimum wage in early 2014, all but one (New Jersey) are seeing employment gains. Furthermore, nine of the remaining 12 states are above the median for this period. The average change in employment for the 13 states that increased their minimum wage is +0.99% while the remaining states have an average employment change of +0.68%. 

The experience of the 13 states that already increased their minimum wage in 2014 paints a very positive picture for Washington and its low-wage workers.


Note: All data taken from the BLS: “Regional and State Employment and Unemployment (Monthly),” Table 5, seasonally adjusted.

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  • Guest - Sarah Filipovich

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    Thank you for your article. I am currently working on a multimedia project, isminimumenoughcom, and I was wondering if you could let me know what sources you used for your article? Thank you for your time.

  • Guest - Robert

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    Please note that the distribution of states that increased the minimum wage seems to be evenly distributed within the overall rankings. This could imply that the increase in employment in those states is not due to the minimum wage increase, although that is an interpretation.

    from Rolla, MO, USA
  • Guest - Bob

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    The disingenuousness of this article is truly amazing. The old adage is very true that figures don't lie but liars will figure. The completely fallacious comparison being made in this article is that a percentage change means more than the actual number of people now actually employed. When averaging the percentages, this author is completely ignoring the number of people that live in each state. So comparing the percentages in this way, the author is misleading the readers by implying that a gain of 2.95% for California (1.145 million people out of their 38.8 million residents in 2014) is weighted exactly the same as the 1.28% for Rhode Island (13.5 thousand people out of 1.055 million residents). This article is a complete and utter lie, built solely to support the agenda that the author wanted to prove.

  • Guest - BePlease

    In reply to: Guest - Bob Report

    You are stupid. We all use percentages and rates when comparing because they are more representative. All you are saying is that more people in a state means they deserve better representation. 1% of 5,000,000 is just as important as 1% of 5,000

  • Guest - S carter

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    Also, they don't compare the rise (or fall) in the number of minimum wage jobs, only overall employment. The premise that raising the minimum wage leads to more factory jobs or tech jobs or whatever is laughable.

    from Eureka, CA, USA
  • Guest - TheOtherJim

    In reply to: Guest - S carter Report

    How is it laughable? The premise is simple: Put more money in the hands of low-wage workers and they will spend it, thus boosting the regional economy, thus leading to more jobs. Lower income people have much less discretionary income than do others higher up on the scale; most of their income goes to pay for necessities, such as food and housing. Because of this, any extra money they see is likely to be spent almost immediately on postponed purchases, and these expenditures lead to a multiplier effect. One dollar in the hands of someone in those circumstances leads to more than one dollar's worth of economic activity.
    (By the same token, the reverse is true for the wealthy. Give them more money -- say, in the form of a tax cut -- and that money is far less likely to make it back into the general economy. It might go for an expensive boat, if the person in question doesn't already have several, but it's more likely to get spent on the Wall Street Wheel of Fortune, where it basically disappears from the economy at large.)


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