Recent New York Times opinion
articles by Arindrajit Dube and Paul Krugman suggest that raising the
minimum wage will have no effects on employment.
University of California (Irvine)
professors David Neumark and J.M. Ian Salas and Federal Reserve Board of
Governors economist William Wascher show that raising the minimum wage
will result in fewer jobs for teens and low-skill workers. Their recent
working paper,Revisiting the Minimum Wage-Employment Debate: Throwing Out the Baby with the Bathwater,
was released by the National Bureau of Economic Research this year.
They conclude that “the research record still shows that minimum wages
pose a tradeoff of higher wages for some against job losses for others,
and that policymakers need to bear this tradeoff in mind when making
decisions about increasing the minimum wage.”
This debate shows the problems of
statistical analysis when interpreting complex economic situations.
Since fewer than 3 percent of American workers are paid the minimum wage
or below, teasing out effects on the aggregate economy is complex—many
are unseen.
Nevertheless, evidence is clear that
teens and low-skill workers are disproportionately affected by
increases in the minimum wage (see Neumark's review of
minimum wage literature). When minimum wage is increased, workers whose
skills are below the new level are pushed out of or blocked from
entering the workforce. Young people (half of those earning the minimum
wage) who are looking to gain experience are put at a disadvantage. In
earlier work,
Neumark has shown that higher minimum wages particularly affect African
American teens, whose unemployment rate is now 36 percent.
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