Voters Approve Minimum Wage Hikes

As pollsters predicted, voters approved increases in state-level minimum wages in four states (Alaska, Arkansas, Nebraska, and South Dakota), although to levels less than the increase in the minimum wage proposed by Congressional Democrats (to $9.75 in Alaska, $9 in Nebraska, and $8.50 in Arkansas and South Dakota). Voters in the City of San Francisco voted to raise the minimum wage to a whopping $15 per hour from the current $10.74.

As National Review notes, “In February, the Congressional Budget Office concluded that a higher wage floor would have significant disemployment effects” by increasing unemployment.

As economics professor Mark J. Perry notes, minimum wage increases drive up unemployment among teens, knocking some of them off the bottom rung of the economic ladder. Quoting economist Kevin Erdmann, he notes that “In every episode” in which the minimum wage increased over the last 60 years, “except 1996 (which is the smallest hike relative to average wages), there was a distinct decline in the trend of teen employment, over the period of time covering from a few months before the initial hike until a few months after the follow-up hike.” Recent research published by the National Bureau of Economic Research arrives at similar conclusions.

Similarly, as I once noted in The Washington Post, studies show “young workers disproportionately lose their jobs in response to minimum wage increases.”

This increase in unemployment, recognized by the CBO and most economists, is contrary to false claims by journalists like Kevin Drum of Mother Jones, who argues that there is an “almost unanimous consensus” among economists that minimum wage increases “don’t have any noticeable effect on unemployment.” Similar false claims get peddled by liberal newspapers to the electorate when they endorse ballot initiatives to increase the minimum wage, leaving voters with the misleading impression that minimum wage increases are a free lunch.

But they are not: they impose very real costs on consumers, employers, and workers. Minimum wage increases drive up the price of items purchased by people of modest means while harming the least skilled workers.