Raising the minimum wage helps you no matter how much you earn. The next time the debate about whether or not your region of the world should raise wages you ought to argue for rating wages. The only downside of getting paid more is that…well, nothing really. Don’t believe the lies that raising minimum wage increases leads to job losses because there’s no evidence that that is the case.
Economist Arindrajit Dube of the University of Massachusetts at Amherst, who is perhaps the leading expert on the economic impact of the minimum wage, and his co-authors Doruk Cengiz (also at UMass), Attila Lindner of University College London, and Ben Zipperer of the Economic Policy Institute conducted the study. They used detailed data and advanced statistical methods to parse the effects of minimum-wage increases on low-skilled workers—including those making at or around the minimum wage—as well as on high-skilled workers and the economy as a whole.
The study finds that minimum-wage increases occurring over more than three-and-a-half decades resulted in higher wages for low-skilled workers, with no reduction in low-wage employment five years out. This was true overall, and separately for younger workers, less educated workers, and minorities. Low-wage workers saw a wage gain of 7 percent after an increase in the minimum wage.
The Ontario government recently decided to ensure inequality continues to grow by not raising minimum wage, which is obviously a bad thing. The rationale by the anti-worker Conservative party was that paying people more will ruin the economy. They couldn’t be more wrong. Seattle went through the same debate years ago and the results from there show that their economy benefited from increased wages. The evidence is so good that people who argued against the wage increase have admitted they were wrong. Even the research that opponents used to argue against Seattle’s wage increase was based on bad data and mired in ideological goals.
Let’s hope that other jurisdictions base their decision on evidence instead of ideology.
Seattle, like some other thriving West Coast cities, a few years ago passed an ordinance raising the minimum wage to $15 an hour in a series of steps. The law was a partial response to rising income inequality and poverty in the city, which began its post-crisis economic boom well before the rest of the country.
The options are to either rethink your ideology or alternatively ignore the data. Most participants seem to have done the latter. Kudos to the University of Washington team for at least trying to incorporate the facts into their latest research.
Paying workers a reasonable amount of money works out well fro economies. Raising minimum wage is happening in a few jurisdictions throughout North America and the results are coming in that the wage increase for the lowest-paid employees benefits everyone. In Ontario the minimum wage was increased last year and economic growth continued unabated, so much so that unemployment is now at a 18-year low in the province.
“It is tough to find a lot of evidence that employment has been negatively impacted,” said Josh Nye, senior economist with Royal Bank of Canada. “In terms of the minimum-wage hike, it has come at a good time when the economy is able to absorb that. Demand for labour is so strong and labour market conditions are quite tight. Employers don’t have much of a choice,” he said.
The minimum-wage hike has helped boost paycheques. In Ontario, the average hourly rate increased 4.3 per cent to $27.16 over July of last year. Across Canada, average hourly earnings rose by 3.2 per cent to $26.61.
Haters keep telling us that minimum wage is too high, which is really saying they would love free labour for private profits. Those haters are also not thinking about the economy at large. A new, massive, study on the impact of minimum wage concludes that minimum wage increases help people who aren’t currently being paid enough and that the benefits to that group cascade upwards on the economic ladder. Trickle down economics is a clear failure and trickle up economics looks rather effective!
The study is indeed impressive. Census researchers Kevin Rinz and John Voorheis used data from the bureau’s Annual Social and Economic Supplement, which surveys more than 75,000 households. The authors then link this data with administrative filings from the Social Security Administration on wages and track the changes between 1991 and 2013. The study stands out for covering such a large number of people over such an extended period.
“[R]aising the minimum wage increases earnings growth at the bottom of the distribution, and those effects persist and indeed grow in magnitude over several years,” the authors write. At the same time, there’s little indication that other people will lose their jobs as a result of the minimum wage—the outcome conservatives always warn about.
2018 marked a minimum wage increase in Ontario which follows a trend throughout North America of raising the level minimum companies can pay workers. Large, heartless, corporations like Tim Hortons have released statements that they think paying people more is bad – they are wrong. It’s clearer than ever before: minimum wage increase have historically been good for the economy and people.
We have been raising the minimum wage for 78 years, and as a new study clearly reveals, 78 years of minimum-wage hikes have produced zero evidence of the “job-killing” consequences these headline writers want us to fear.
In a first-of-its-kind report, researchers at the National Employment Law Project pore over employment data from every federal increase since the minimum wage was first established, making “simple before-and-after comparisons of job-growth trends 12 months after each minimum-wage increase.”