On a Higher Minimum Wage and What It Really Means for Jobs

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On the Surface

Opponents of a higher minimum wage were enraged last week when New York announced a $15 minimum wage starting in 2018. Employers have proclaimed that higher wages mean fewer jobs and a shrunken economy. These claims are empirically false: a higher minimum wage removes the middleman from trickle-down economics, growing the economy and providing more jobs.

Jobs and the Economy

According to Heidi Shierholz of the Economic Policy Institute in 2014:

“There is a vast literature on the effects of increases in the minimum wage on employment that spans many decades … increases in the minimum wage have raised wages, but have had essentially no effect on employment, even in times when the labor market is weak… a meta-study of 64 minimum wage studies conducted between 1972 and 2007 found that the effects of increasing the minimum wage were…at or near zero employment effects.”

The thinking promulgated by minimum wage detractors has its origins in trickle-down economics, a theory that states that when economic benefits are provided to large businesses, the surplus income will be spent back into the economy, “trickling down” to lower incomes and creating jobs.

This ideology has the opposite effect; American productivity has increased four times since the 1960’s, but workers have yet to see a corresponding increase in pay. Growing the economy starts at the bottom. Raising the minimum wage has a reciprocating effect: when workers have more money, they spend more. When a restaurant pays an employee $15 per hour instead of $5 per hour, that worker can now afford to eat at that restaurant, creating more demand that has a ripple effect and in turn creates more jobs.

If the minimum wage is raised, jobs will not be destroyed; rather, they will be created. When workers have more, they spend more, which in turn will grow the economy and shatter the convoluted ideology of trickle-down economics.

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