Solvency – AT: Job Loss

Center for American Progress 18 (independent, nonpartisan public policy research organization), “Blueprint for the 21st Century; A Plan for Better Jobs and Stronger Communities,” 05/14/2018, https://www.americanprogress.org/article/blueprint-21st-century/#:~:text=The%20Blueprint%20for%20the%2021st%20Century%2C%20or%20Jobs%20Blueprint%2C%20proposes,of%20bargaining%20power%20of%20those

While some suggest that minimum wage increases will lead to job losses, companies can adjust to the increased labor costs through a variety of ways. First, minimum wage increases tend to decrease employee turnover rates, which are very high in lowwage industries. Since replacing employees and training their replacements is a costly endeavor—costing about one-sixth of a low-wage workers’ annual salary—this reduction in turnover saves employers a significant amount. For example, Michael Reich, Sylvia Allegretto, and Anna Godoey estimate the reduction in turnover absorbs about 15 percent of the increased payroll costs resulting from Seattle’s minimum wage increase.262 Paying higher wages can also increase worker productivity. Studies show increased wages can lead to more productive workers by increasing motivation, reducing absenteeism, and reducing workers’ financial stress.263 Employers can also adjust for increased minimum wages by raising prices. But since not all workers receive pay increases from minimum wage hikes and labor costs make up only a subset of total operating costs, these price increases tend to be small.264

Furthermore, raising the minimum wage will increase the aggregate income going to families near the bottom of the income distribution, who tend to spend a greater share of their income. This increased spending serves to boost aggregate demand and create additional jobs. When researchers from the University of California, Berkeley Institute for Research on Labor and Employment modeled the potential economic effects of $15 minimum wage proposals in California and New York state, they found that the number of jobs created through increased aggregate demand outweighed any job loss from increased automation and the impact of price increases.265

We’d know if minimum wage hikes caused job loss---empirics and new statistical analysis

Jared Bernstein 18 (chief economist to former vice president Joe Biden, senior fellow at the Center on Budget and Policy Priorities, chair of the United States Council of Economic Advisers), “New evidence of the minimum wage doing what it’s supposed to do: Help low-wage workers,” 03/08/2018, The Washington Post, https://www.washingtonpost.com/news/posteverything/wp/2018/03/08/new-evidence-of-the-minimum-wage-doing-what-its-supposed-to-do-help-low-wage-workers/

Among the many important charts that wage analyst extraordinaire Elise Gould has in her latest update on U.S. wage trends, the one below is especially revealing. It shows the increase in real hourly earnings for low-wage workers, those at the 10th percentile of the wage scale (meaning 90 percent earn more; 10 percent earn less) broken down by gender and by states that raised or didn’t raise their minimum wage at any time between 2013 to 2017.

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A little background. The federal minimum wage has been stuck at $7.25 since 2010, so more than half the states have acted on their own to raise their wage floor (many cities have done so too). Gould reports that a bunch of states, listed under the figure, raised their minimum wages over these years. Some did so due to legislation, either new or a phase-in of an already legislated increase; others did so because they index their wage floor to inflation (which should be, but isn’t, the law of the land; the real value of the federal minimum is constantly being eroded by inflation).

The figure makes two important points. First, as you might expect, real low pay grew more than twice as fast in states that rose their minimum wages, about 5 percent versus 2 percent. Second, the gains are larger for women than men. That’s consistent with research by the Economic Policy Institute showing that minimum wage increases tend to reach more women than men, simply because women are more likely to earn low wages. Minimum wage analyst David Cooper finds that 56 percent of the beneficiaries of a hike in the federal wage floor to $15 by 2024 would be women.

Then there’s this third point shown in the table below. With the help of Lexin Cai, I looked at the growth of employment, both overall and in three low-wage sectors (retail, leisure/hospitality, and food services, a subset of leisure), along with the decline in unemployment in these two sets of states. The reason for this bit of analysis is that some might claim that the wage gains in the states that raised their minimums came at the expense of jobs in those states. At least from this aggregate level, that’s not so. Both overall and in the lower-wage sectors, job growth was slightly faster in states that raised their wage floors and unemployment fell a bit more.

Much more careful statistical work corroborates this result, most notably this innovative approach from a recent paper by four high-octane minimum wage researchers (Cengiz, Dube, Linder, Zipperer). While there’s a bit of math in the paper, the approach is simple: use the many state increases in their wage floors as a sort of natural experiment to look at the change in jobs right around the old and new minimum wages. If these minimum wage hikes kill jobs, then the number of jobs right at or above the new minimum should be lower than those at or slightly above the old floor. In fact, the researchers find that jobs largely just shift from around the old wage to around the new wage.

The analysis underscores what by now should be a pretty simple intuition. After all, states and cities have been raising their minimums for literally decades by now. If these moves lead to the widespread job losses opponents still claim, we’d know it. In fact, most increases don’t displace most workers; they just raise their pay, as intended.

That’s not to say no one ever loses a job or hours of work due to higher wage floors. Nor is it to say that a minimum wage of any level could be handily absorbed, even in low-wage states. But any debate over this policy should be informed by results like the ones shown here, and should ignore claims that the policy generates nothing but negative, unintended consequences.

To the contrary, it’s a proven way to boost low wages, thereby helping to reconnect the economic fates of low-wage workers to that of the growing economy, a connection that’s been severed by decades of inequality and diminished bargaining power for those who depend on their paychecks as opposed to their stock portfolios. Viewed in this light, higher minimum wages are an essential part of the economic rebalancing that must occur.