Job loss from minimum wage hikes often less than expected, NCPA explains why. Increase is offset by reducing other compensation.

By: Richard S. Davis
12:00 am
April 10, 2014

The National Center for Policy Analysis takes on one of the challenges posed by supporters of an increased minimum wage. Specifically, they answer the question of why job losses often come in lower than opponents predict. It’s a short, compelling research post. The gist:

Both proponents and opponents of minimum-wage hikes do not realize that the very small employment effects consistently found across numerous studies provide the strongest evidence available that increases in the minimum wage have been largely neutralized by cost savings on fringe benefits and increased work demands and the cost savings from the more obscure cuts in nonmoney compensation.

Low wage workers understand that. The Seattle Times reports on formation of a new group opposed to the Seattle $15 wage proposal. Among the group is this potentially affected employee.

One member of the group, J. Boswell, describes himself as the son of a trucker who usually works for minimum wage plus tips and believes a wage hike — phased in or not — would be detrimental to minorities, immigrants and people with low skills.

“I do not understand how so many low-wage workers think they are going to go back to their jobs, making more money, without seeing their hours or benefits cut,” he said.

Not everyone gets it, a pro-wage-hike op-ed shows up in the Times asserting that…

…we have plenty of real-world examples to learn from, including Washington state’s own experience, where raising the minimum wage occurred without the negative impact on employment most businesses fear.

We’ve already pointed out the impact on teen unemployment and the restaurant industry. The op-ed even trots out the notion that the minimum wage should grow with productivity (however defined). We address the flaws in that logic here.

Categories: Categories , Current Affairs , Employment Policy.
Tags: business costs , competitiveness , minimum wage