Does raising the minimum wage cause job loss?
The bulk of rigorous research examining hundreds of case studies of minimum wage increases at the state and local levels finds that raising the minimum wage boosts incomes for low-paid workers without reducing overall employment or job growth to any significant degree.
The minority of researchers reaching different conclusions rely on flawed or less precise methodologies that fail to take advantage of the most recent advancements in economic research.
This is supported by two leading meta-studies, which survey and pool the data from more than four decades of research. Meta-studies represent the most reliable and sophisticated approach to studying the employment impact of raising the minimum wage, as they aggregate data from dozens of studies containing thousands of different estimates of the employment impacts of minimum wage increases.
The first meta-study, by Hristos Doucouliagos and T.D. Stanley (2009), reviews 1,492 different findings from 64 different studies and shows that there is “little or no significant impact of minimum wage increases on employment,” as noted in a widely cited 2013 report by the Center for Economic and Policy Research.
The second meta-study, by Dale Belman and Paul Wolfson (2014), reviews more than 70 studies and 439 distinct estimates to come to a very similar conclusion: “[I]t appears that if negative effects on employment are present, they are too small to be statistically detectable. Such effects would be too modest to have meaningful consequences in the dynamically changing labor markets of the United States,” and too small to merit policy or political controversy.
In addition to these meta-studies, two individual studies have developed state-of-the-art research methods to enable economists to better isolate and analyze the actual impact of minimum wage increases; they confirm that raising the minimum wage does not reduce employment.
The first, published by economists at the University of Massachusetts, University of North Carolina, and University of California (2010), compared employment data among every pair of neighboring U.S. counties that straddle a state border and had differing minimum wage levels at any time between 1990 and 2006. It found that minimum wage increases did not cost jobs. The second companion study (2011), found that these results hold true even during periods of recession and high unemployment.