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Higher Minimum Wage Lifts People out of Poverty, Doesn’t Hurt Employment

With some Sioux Falls activists considering placing a $15/hour minimum wage on the 2020 ballot, we may get the chance to hear the Novstrups again bleating that keeping wages low provides opportunity and raising wages hurts workers. If such bleatings arise again, we can add to our rational responses this new working paper on minimum wage effects in low-wage areas published by the Institute for Research on Labor and Employment at the University of California–Berkeley. Looking at county-level data nationwide since 2005, researchers Anna Godøy and Michael Reich find higher minimum wages relative to local median incomes doing exactly what they are intended to do, helping people get out of poverty without hurting anyone’s hours:

Our results generally suggest the presence of positive wage effects. We do not detect adverse effects on employment hours or weeks worked, but we do find reduced household and child poverty in counties with high relative minimum wages, up to .82, and as well in areas with especially high bites. We also do not find negative effects among blacks, Hispanics and women…. The results have self-evident policy implications [Anna Godøy and Michael Reich. (2019). “Minimum Wage Effects in Low-Wage Areas,” IRLE Working Paper No. 106-19, 2019.06.26, p. 4].

Higher minimum wages are good for workers. Imagine that.

By the way, among OECD nations, the United States has the lowest minimum wage relative to either median or mean wage. In 2017, our national $7.25/hour minimum wage was only 34% of our median wage and 24% of our mean wage. In the other 27 countries in this dataset, the minimum wage averaged 51% of the median wage and 40% of the mean wage.

6 Comments

  1. Porter Lansing 2019-07-06

    👍

  2. Jenny 2019-07-06

    Minneapolis voted in a $15 wage

  3. Debbo 2019-07-06

    Jenny, I believe St. Paul has done the same.

    I’m not surprised by these findings. The “they’re taking our jobs” lie has also been clearly disproved.

    What’s been proved flatly true is that the GOP is completely economically inept and clueless.

  4. Cory Allen Heidelberger Post author | 2019-07-06

    We just have to keep all this science on file. When Trump falls and takes the old, worn-out white misogynist generation once and for all, when he is replaced by the rising generation of New Americans (those who embody what really makes America great, not the insecure rage and selfishness but the brave love and inclusiveness), we will be able to turn back to all this evidence and craft all the policies we need to make our nation better.

  5. happy camper 2019-07-06

    It doesn’t hurt right now during a time of full employment. Higher wages are simply a result of supply and demand. Trump would like to say our continued good economy is his accomplishment it isn’t but your arguments fall flat against his things at least for the moment still going well. Fun to watch you try to bash him though. As horrible as he is the election may end up being about the economy (stupid).

  6. Cory Allen Heidelberger Post author | 2019-07-08

    Hap, baloney. This blog post cites actual scientific research, not Trump’s wishful marketing slogans.

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