Democrats often argue that the negative effects of raising the minimum wage have been overstated. This argument finds support in a number of recent studies that suggest minimum-wage hikes are not necessarily job-killers. Hence the current bidding war among progressives. Bernie Sanders and Elizabeth Warren have proposed increasing the federal minimum wage to $15 an hour. Congresswoman Rashida Tlaib wants it to be $20 an hour. On Sunday, according to the Associated Press, presidential candidate Tom Steyer said he would make it $22 an hour.
Time for a reality check.
Last year, the nonpartisan Congressional Budget Office analyzed the potential consequences of raising the federal minimum wage to $15 an hour in 2025. Its median estimate was that 1.3 million workers would lose their jobs. CBO also estimated that raising the minimum wage to $12 an hour in 2025 would cause 300,000 people to lose their jobs. Raising it to $10 an hour in 2025 “would have little effect on employment,” but that’s only because a $10 minimum wage would have such a small impact overall.
Here’s how one of the leading academic experts on the minimum wage, UC-Irvine economist David Neumark, summarized the scholarly research in a 2015 San Francisco Fed letter:
“Many studies over the years find that higher minimum wages reduce employment of teens and low-skilled workers more generally. Recent exceptions that find no employment effects typically use a particular version of estimation methods with close geographic controls that may obscure job losses. Recent research using a wider variety of methods to address the problem of comparison states tends to confirm earlier findings of job loss. Coupled with critiques of the methods that generate little evidence of job loss, the overall body of recent evidence suggests that the most credible conclusion is a higher minimum wage results in some job loss for the least-skilled workers — with possibly larger adverse effects than earlier research suggested” (emphasis added).