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Originally Posted by ipollux I've noticed the minimum wage has been going up steadily in various parts of the U.S. over the last couple of years. Today there was a story about it on the front page of the 'paper, and it sparked a debate in the newsroom. My argument was that raising the minimum wage doesn't help those at the bottom, but actually hurts them. When employers are forced to pay their employees more money, many will have to lay off some of their workers in order to pay those they keep the new higher wage. This also, of course, leads to price inflation. Don't be fooled, when wages go up, the price of living goes up, hence minimum wage being higher in the parts of the country that require more money to live. I honestly don't see the benefits of continuing to raise the minimum wage, but I'm open to arguments for it; I just haven't heard a good one yet.

There is little question that the overall impact of a minimum wage is positive, as the following facts make clear:

If the minimum wage were increased nationally to $7.25:

* 14.9 million workers would receive a raise,

- 80% of those affected are adults age 20 or over, and
- 7.3 million children would see their parents income rise.

* Families with affected workers rely on those workers for over half of their earnings.

* 46% of all families with affected workers rely solely on the earnings from those workers.

* The best recent research on the economic impact of the minimum wage shows positive effects without job loss.

* Even the research that suggests a negative labor market effect shows only a minimal impact that is more than offset by the higher wage levels.

* The states that have adopted higher-than-federal minimum wages have seen low-wage workers’ incomes rise with no negative side-effects.

* Over 650 economists, including five Nobel Prize winners and six past presidents of the American Economics Association, recently signed a statement stating that federal and state minimum wage increases “can significantly improve the lives of low-income workers and their families, without the adverse effects that critics have claimed”
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The belief that raising the minimum wage causes job loss was more commonly accepted by economists decades ago, but high-quality research by leading academic economists has forced the economic community to re-evaluate these arguments. This consensus view rapidly eroded following evidence from the 1990s. Even Benjamin Bernanke, President Bush’s appointee as the Chairman of the Federal Reserve, has noted that “economists disagree about …whether increases in the minimum wage reduce employment of low-wage workers”(Bernanke 2006). In lieu of negative employment effects, economists are frequently citing higher productivity, decreased turnover, lower recruiting and training costs, decreased absenteeism, and increased worker morale as ways in which employers may be able to offset some of the costs of a wage increase .

Some distinguished economists have acknowledged their change of opinion on the issue. Former Federal Reserve Vice Chairman and current Princeton economist Alan Blinder commented, “My thinking on this has changed dramatically. The evidence appears to be against the simple-minded theory that a modest increase in the minimum wage causes substantial job loss”
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Following the 1997 federal minimum wage increase, Nobel Laureate Joseph Stiglitz of Columbia University observed, “We saw no ripple effect at all in the unemployment rate. Unemployment just continued to go down.” The minimum wage increase, he said, “was totally swamped by other factors going on in the economy” (Chipman 2006). Accordingly, the 1999 Economic Report of the President stated: “Many studies have examined this issue, and the weight of the evidence suggests that modest increases in the minimum wage have had very little or no effect on employment.”

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In response to dire predictions made by minimum wage opponents prior to the enactment of Florida’s minimum wage, Bruce Nissen of Florida International University and Luke Shaefer of the University of Chicago followed up with a comprehensive study of Florida’s economy one year after the minimum wage increase. Their conclusion:

No empirical evidence shows that Florida’s minimum wage has caused businesses to lay off workers. Instead, state employment has shown strong growth since the new wage took effect, better than in previous years and better than the U.S. as a whole.

Similarly, an examination of the Wisconsin labor market one year following the implementation of an increase by the Center on Wisconsin Strategy at the University of Wisconsin-Madison found that the most-affected industry, eating and drinking establishments, grew three times more rapidly than the overall Wisconsin job growth rate.

Washington has the highest minimum wage in the country and was the first state to annually adjust its state minimum wage for cost-of-living increases. The Washington-based Economic Opportunity Institute has found that Washington has out-performed the rest of the country in jobs since the end of the recession in November 2001, and that industries most-heavily affected by the minimum wage have not seen adverse employment impacts.

Studies by the Oregon Center for Public Policy have found that Oregon has had faster job growth than 41 other states since its minimum wage and indexing went into effect in 2002. Furthermore, low-wage employers have been adding jobs at a faster rate than Oregon employers overall since the higher minimum wage and annual cost-of-living adjustments were implemented

A recent Fiscal Policy Institute (FPI) study of state minimum wages found no evidence of negative employment effects on small businesses or in the retail industry. Examining government data, FPI found that none of the many states that have raised their minimum wages above the federal level have seen labor market or other economic problems arising from their higher rates.

Minimum wage trends: Understanding past and contemporary research