My friend Chad at CCK poses this provocative question:
Does anyone know a person who was fired from their job because the minimum wage was raised?
Conservatives like this strawman, but I've yet to see a real-life example of it.
I am not exactly sure what would satisfy Chad. Someone whose boss let him go and actually said: "Hey, I have to. It's that damn minimum wage increase."? The real question is whether raising the minimum wage decreases employment across the board among the most vulnerable segments of jobseekers. In fact, most economists believe that significant increases in the minimum wage have precisely that effect. They believe this because standard economic theory predicts it, and because it is in fact what happens.
Here are some figures from the National Center for Policy Analysis:
In a new study, economists Richard Burkhauser, Kenneth Couch and David Wittenburg review the evidence from the latest minimum wage increase and find that the 1996-97 minimum wage rise led to a decline in teenage employment in the range of one to three percent.
In a study published by the Federal Reserve Bank of San Francisco, Kenneth Couch translated these conclusions into raw numbers.
- At the low end of the range, at least 90,000 teenage jobs were lost in 1996 and another 63,000 jobs lost in 1997 (see figure).
- At the higher end, job losses may have equaled 268,000 in 1996 and 189,000 in 1997.
- He estimates that a $1 rise in the minimum wage will further reduce teenage employment by between 145,000 and 436,000 jobs.
The CATO Institute has a more careful study of the effects of the 1990-1991 increase in the minimum wage, written by three economists from Texas A&M and the University of Chicago. They observe that employment declined among all age groups after the wage hike. It declined most steeply among younger workers, whose labor is less valuable. Male workers between the ages of 20 and 24 saw a 4.4% decline. Males in their teenage years saw a decline of almost 7%. Women suffered only slightly less severe declines.
Contrary to what Chad says, the idea that hikes in the national minimum wage hurt the most vulnerable workers is no "straw man." It is based on overwhelming evidence, as well as common sense. When you artificially increase the price for some category of goods or services, you will decrease the demand. When employing people becomes more expensive, employers choose the more valuable employees and hire fewer of the least valuable employees. What is wrong with Chad's question is that it asks the wrong thing. What matters is not who is fired, but who is not hired in the first place.
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