Fox News figures responded to President Obama's proposal to increase the minimum wage by resurrecting the myth that such an increase will negatively affect employment. In reality, there is no evidence that raising the minimum wage results in higher unemployment.
In his annual State of the Union address, Obama proposed raising the minimum wage from $7.25 to $9 an hour to stimulate economic growth. The increase would raise incomes for 15 million American workers.
In response, Fox News anchor Bret Baier and guest Nina Easton pushed the myth that raising the minimum wage will have a negative impact on employment.
Anchoring Fox's State of the Union coverage, Baier said that small businesses and Republicans typically push back on minimum wage hikes because they say “it will lead companies to cut back, lay people off, and not expand business.”
Easton, an editor for Fortune magazine, said that increasing the minimum wage “at a time when unemployment is still close to 8 percent is a job killer.”
In fact, studies show that raising the minimum wage does not result in higher unemployment.
In a March 2011 report, the Center for Economic and Policy Research found that raising the minimum wage has no “discernible impact” on employment. CEPR concluded that wage increases are more likely to result in more, rather than fewer, jobs:
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 2010 Institute for Research on Labor and Employment study likewise found “no detectable employment losses from the kind of minimum wage increases we have seen in the United States.”
As The New York Times has explained, “the federal minimum wage has failed to keep pace with inflation in recent decades.”