Impact of the Minimum Wage on Employment and Low-Income Families

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Tuesday, 03 January 2012 05:57

Morning Edition had a piece on the minimum wage hikes that took effect in various states and cities at the start of the year. The piece included an interview with economist David Neumark who referred to research showing that a 10 percent hike in the minimum wage leads to a 1-2 percent drop in employment among minimum wage workers.

While there is research showing no job loss (as noted in the piece by David Cooper, an analyst at the Economic Policy Institute), it is worth noting what the 1-2 percent job loss number would actually mean. Minimum wage jobs tend to be high turnover. A reduction in employment of 1-2 percent would effectively mean that the typical minimum wage worker would spend somewhat more time between jobs rather than workers literally be throwing out of their jobs. In other words, it would mean that the typical minimum wage worker would get 10 percent more pay for each hour worked, but would work 1-2 percent fewer hours.

The piece also concluded by saying that a minimum wage hike would have little benefit for most low-income families because most workers with families are earning wages well above the minimum. It asserted that many of the workers helped by the increase will be teenagers in middle income families who work for spending money. In fact, an analysis by Heather Boushey and John Schmitt of the last national law raising the minimum wage found that 70 percent of the people who would benefit were over the age of 20.