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Higher Minimum Wage Correlates With Job Growth

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One of the biggest arguments against raising the minimum wage has been a pay hike's potential impact on job growth. Many business groups argue that employers won't be able to hire more people if they can't offer low wages. However, recent data from the Department of Labor shows that this might not be the case. Twelve of the 13 states that raised their minimum wage since the beginning of the year have experienced more job growth than lower-wage states.

One of the biggest arguments against raising the minimum wage has been a pay hike’s potential impact on job growth. Many business groups argue that employers won’t be able to hire more people if they can’t offer low wages. However, recent data from the Department of Labor shows that this might not be the case. Twelve of the 13 states that raised their minimum wage since the beginning of the year have experienced more job growth than lower-wage states.

(Photo Credit: LendingMemo/Flickr)

Thirteen States

Do You Know What You're Worth?

The Associated Press explains that 13 states raised their minimum wages at the beginning of 2014. Nine of the thirteen increased their minimum wages automatically, in line with inflation:

  • Arizona,
  • Colorado,
  • Florida,
  • Missouri,
  • Montana,
  • Ohio,
  • Oregon,
  • Vermont, and
  • Washington.

Four more states approved legislation mandating the increases:

  • Connecticut,
  • New Jersey,
  • New York, and
  • Rhode Island.

Meanwhile, California raised its minimum wage to $9 per hour as of July 1, 2014. It is scheduled to increase to $10 per hour on January 1, 2016.

Of the 13 states, Vermont is the only one whose job growth remained flat. The other 12 experienced increased job growth. California bears watching.

President Obama

The President would like to raise the federal minimum wage. He cited the new data recently while speaking in Denver, “When … you raise the minimum wage, you give a bigger chance to folks who are climbing the ladder, working hard…. And the whole economy does better, including businesses.”

Variables

Some economists argue that six months of data is not enough to draw conclusions. There are many variables at work in different states, including types of industry. This trend, however, is difficult to ignore regardless of where you stand on the minimum wage debate.

Businesses have more than one way of offsetting costs, and hiring freezes are not the only response to paying higher wages. Companies that pay and treat their employees well experience less turnover, which in turn saves the cost of hiring and training new people.

The bottom line seems to be that in places where employees are offered closer to a living wage, job growth is increasing. If this trend continues, it bodes extremely well for the American worker.

Tell Us What You Think

Do you think the federal minimum wage should be raised — if so, by how much? Leave a comment or join the discussion on Twitter.


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Cliff Sondock
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Cliff Sondock

The conclusion from the left leaning Center for Economic and Policy Research are wrong and misleading.   First, the claim of the Center for Economic and Policy Research is that states which raised their Minimum Wage experienced higher employment growth.  The truth is that some of the states that raised their Minimum Wage were among the lower Minimum Wage states.  Additionally, there is a time lag between changes in Minimum Wages and employment growth.  Employment growth is a measure of change over time; while a Minimum Wage change happens at a moment in time.  So, the claimed causal relationship is an… Read more »

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