Raising the minimum wage 6 years later: What are the results?

Six years ago, the federal minimum wage was raised to its current $7.25 an hour.  All sorts of claims have been made about raising the minimum wage – some of them laughably stupid and demonstrably false.

But with several cities and states looking to jack up the minimum wage to $15 an hour, a look at the intervening years since the wage was last raised would be instructive.

Daily Caller:

The aftermath of the last increase in 2009, however, was not all that good. Though some people found themselves in a better financial situations, others were left much worse.

“Most of them would receive higher pay that would increase,” stated a 2014 report from the Congressional Budget Office (CBO). “But some jobs for low-wage workers would probably be eliminated.”

The CBO report looked at the 2009 increase along with other local incentives. While states cannot go below the federal minimum wage, many have decided to go above it. A report from American Enterprise Institute (AEI) found the impact is much worse for young and low skilled workers.

“When the minimum wage rose by 41% between 2007 and 2009 – it had a disastrous effect on teenagers,” the AEI report detailed. “The jobless rate for 16-19 year olds increased by ten percentage points, from about 16% in 2007 to more than 26% in 2009.  Of course, the overall US jobless rate was increasing at the same time, from about 5% to 10%.”

The National Bureau of Economic Research (NBER) and The Heritage Foundation also both found employment opportunities for young and low skilled workers falls when the minimum wage goes up. Not all economists, however, are in agreement about the negative impact of raising the minimum wage. A 2013 study from Center for Economic and Policy Research (CEPR) found the impact on employment would be small at best.

“Two recent meta – studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low – wage workers,” the CEPR report found. “The most likely reason for this outcome is that the cost shock of the minimum wage is small relative to most firms’ overall costs and only modest relative to t he wages paid to low – wage workers.”

One little-noticed effect of the minimum wage is that most workers don't make it for very long:

“Of those workers making the minimum wage today, two-thirds will be earning a higher wage one year from now,” an IPI report by Naomi Lopez Bauman stated. “Most workers, once they learn the job and demonstrate a level of competence, will earn more as the value of their labor increases to their current employer or a competing one.”

President Obama still wants to raise the wage to $10.10 an hour, which, given the weakness of the economy, would be a disaster.  And what do you think would be the effect of a rise in the minimum wage to $15 an hour?  Seattle and other cities are trying it, so it won't be long before the predicted loss of jobs and the stifling of business creation occur.

Six years ago, the federal minimum wage was raised to its current $7.25 an hour.  All sorts of claims have been made about raising the minimum wage – some of them laughably stupid and demonstrably false.

But with several cities and states looking to jack up the minimum wage to $15 an hour, a look at the intervening years since the wage was last raised would be instructive.

Daily Caller:

The aftermath of the last increase in 2009, however, was not all that good. Though some people found themselves in a better financial situations, others were left much worse.

“Most of them would receive higher pay that would increase,” stated a 2014 report from the Congressional Budget Office (CBO). “But some jobs for low-wage workers would probably be eliminated.”

The CBO report looked at the 2009 increase along with other local incentives. While states cannot go below the federal minimum wage, many have decided to go above it. A report from American Enterprise Institute (AEI) found the impact is much worse for young and low skilled workers.

“When the minimum wage rose by 41% between 2007 and 2009 – it had a disastrous effect on teenagers,” the AEI report detailed. “The jobless rate for 16-19 year olds increased by ten percentage points, from about 16% in 2007 to more than 26% in 2009.  Of course, the overall US jobless rate was increasing at the same time, from about 5% to 10%.”

The National Bureau of Economic Research (NBER) and The Heritage Foundation also both found employment opportunities for young and low skilled workers falls when the minimum wage goes up. Not all economists, however, are in agreement about the negative impact of raising the minimum wage. A 2013 study from Center for Economic and Policy Research (CEPR) found the impact on employment would be small at best.

“Two recent meta – studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low – wage workers,” the CEPR report found. “The most likely reason for this outcome is that the cost shock of the minimum wage is small relative to most firms’ overall costs and only modest relative to t he wages paid to low – wage workers.”

One little-noticed effect of the minimum wage is that most workers don't make it for very long:

“Of those workers making the minimum wage today, two-thirds will be earning a higher wage one year from now,” an IPI report by Naomi Lopez Bauman stated. “Most workers, once they learn the job and demonstrate a level of competence, will earn more as the value of their labor increases to their current employer or a competing one.”

President Obama still wants to raise the wage to $10.10 an hour, which, given the weakness of the economy, would be a disaster.  And what do you think would be the effect of a rise in the minimum wage to $15 an hour?  Seattle and other cities are trying it, so it won't be long before the predicted loss of jobs and the stifling of business creation occur.