Job growth
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. (Shaefer and Nissen 2005, 3)
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 (COWS 2006).
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 (Smith 2003; Watkins 2004; Chapman 2004).
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 (OCPP 2005a; OCPP 2005b).
A recent University of Minnesota study into the potential effect of raising Minnesota’s minimum wage found that the multiplier effect of the minimum wage could result in hundreds of millions of dollars in additional sales for Minnesota businesses, as well as the creation of additional jobs. Using estimates from regional economists, Markusen and her colleagues found that, for every dollar earned from minimum wage hikes, $1.50 to $2.00 of income will be generated in the state economy (Markusen et al. 2004). Additionally, Markusen found that minimum wage increases could act as an economic stimulus in areas with a high concentration of low-wage workers.
Overall, it is clear that higher minimum wages are not an impediment to aggregate job growth. Washington and Oregon, the two states with the highest minimum wages, are both in the top 10 in overall job growth over the last year. Neither of the two states with net job loss over the last year had higher minimum wages (although Louisiana, one of the two states, is still recovering from Hurricane Katrina and is obviously a special case). Minimum wage states had higher job growth over the past 12 months than the national average (1.6% versus 1.5%). Job growth was substantially higher than the national average in the five states with minimums at $7.00 or more for 2006 (2.3%).
http://www.epi.org/content.cfm/bp178
