In the Associated Press story on the minimum wage this morning, this paragraph caught my eye:
The federal minimum wage rises Friday by 70 cents to $7.25 an hour. The labor-friendly Economic Policy Institute estimates that about 167,000 workers in North Carolina will benefit from the minimum wage increase.
That’s quite an assumption ? that businesses will retain every last minimum-wage job, even the marginal ones, despite a sudden 11 percent increase in the wage. Demand curves slope downwards. Duke researchers have found that a 10 percent increase in the minimum wage would decrease a low-skilled worker?s likelihood of finding employment by 2.9 percent. NC has seen a 41 percent increase in the minimum wage since 2007 and now also faces a double-digit unemployment rate.
I checked the Economic Policy Institute, and here is how they frame it (scroll down to Table 2): 167,000 workers in NC will be affected by the minimum wage increase. Now that is more accurate ? after all, “affected” covers positive and negative employment outcomes of the minimum wage increase.
EPI is, of course, a proponent of raising the minimum wage because skilled union workers benefit when the cost of unskilled labor becomes price-prohibitive to fight poverty (an old fallacy). But even they cannot suggest that increasing the minimum wage will lead to more employment of poor people, let alone the least skilled and hardest to employ.
