by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Democrats’ plan to hike the minimum wage would cost American jobs, a new review of decades of studies finds.
The analysis, published Monday by the National Bureau of Economic Research, combed through academic literature on the minimum wage and determined that nearly 80 percent of studies conducted since 1992 have found that an increased minimum wage leads to a decrease in the level of employment.
The effect, study authors David Neumark of U.C Irvine and Peter Shirley of the West Virginia state legislature find, is most pronounced for teens and young adults, particularly for the less-educated—meaning that these groups are most likely to be pushed out of the labor market by a hike in the minimum wage.
The new study comes as congressional Democrats reintroduce legislation to raise the federal minimum wage to $15 an hour and as President Joe Biden pushes for the same hike as part of his proposed $1.9 trillion COVID-19 stimulus plan. Neumark and Shirley’s findings serve as evidence that these pushes could cost American jobs as the unemployment rate remains elevated thanks to the coronavirus recession. …
… In an attempt to cut through this dispute, the pair summarize what they identify as the central findings of some 30 years of papers, stretching back to the pioneering work done by Berkeley economist David Card, one of the first economists to use modern methods to study the effects of the minimum wage on employment and wages.
The results of Neumark and Shirley’s survey are not rosy for minimum-wage advocates. They find that some 80 percent of results are negative, with roughly half being both negative and statistically significant. Most of the studies that find large, positive effects of the minimum wage on unemployment are from the early part of the period surveyed, suggesting that they may be using less accurate data or less effective methodology.