No, Fox, Increasing Minimum Wage Does Not Hinder Job Growth

Blog ››› ››› EMILY ARROWOOD

Fox News host Neil Cavuto rehashed old myths on his show today to argue against a proposed Democratic bill that would raise the federal minimum wage from $7.25 to $10 an hour and require annual increases for inflation. To make his point, Cavuto claimed the higher wage would negatively impact current unemployment levels, saying to Democratic strategist Malia Lazu: "Do you look around at what's going on? Do you look at 8.2% unemployment? ... You think raising the minimum wage is going to bring those rates down? Do you honestly, seriously think that?"

In reality, contrary to Cavuto's claims, there is no evidence that increasing the minimum wage results in higher unemployment.

The Center for Economic and Policy Research found that raising the minimum wage has no "discernible impact" on employment, and in fact, concluded that wage increases are more likely to result in more jobs rather than less:

The results for fast food, food services, retail, and low-wage establishments in San Francisco and Santa Fe support the view that a citywide minimum wages can raise the earnings of low-wage workers, without a discernible impact on their employment. Moreover, the lack of an employment response held for three full years after the implementation of the measures, allaying concerns that the shorter time periods examined in some of the earlier research on the minimum wage was not long enough to capture the true disemployment effects.

Our estimated employment responses generally cluster near zero, and are more likely to be positive than negative. Few of our point estimates are precise enough to rule out either positive or negative employment effects, but statistically significant positive employment responses outnumber statistically significant negative elasticities.

A Fiscal Policy Institute study on 18 states that currently have higher minimum wages than the federal floor, reached the same conclusion, noting: "The simplistic introductory economics prediction that an increase in the minimum wage will result in job loss clearly is not supported by the actual job growth record." The study found that these states not only enjoy higher small business job growth than states with the standard federal wage, the "indicators of economic performance [in these states] were consistently better."

For example, after California increased their minimum wage from $4.75 to $5.65 in 1996, the state saw over 1 million jobs created over the next five years. After the state of New York raised its minimum wage in 2004, total state employment increased 3 percent.

This healthy relationship between the minimum wage and employment also holds true for youth employment. The Economic Policy Institute found that "warnings of massive teen job loss due to minimum wage increases do not comport with the evidence."

The federal minimum wage has lagged far behind the rising cost of living for decades, as the New York Times reported. The Times added:

At face value the federal minimum wage is the highest ever, but proponents of raising it argue that past minimum wages should be considered as adjusted for inflation. That would make 1968, when the minimum wage was nominally $1.60, the highest, at roughly $10 an hour in 2012 dollars.

Posted In
Economy, Jobs, Wages, & Unemployment
Network/Outlet
Fox News Channel
Person
Neil Cavuto
Show/Publication
Your World w/ Neil Cavuto
Stories/Interests
Minimum Wage
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