New Research Debunks Claim That A $15 Minimum Wage Would Not Reduce Employment

The same argument has pervaded through much of academia.

“The last decade has seen a wealth of rigorous academic research on the effect of minimum wage increases on employment, with the weight of evidence showing that previous, modest increases in the minimum wage had little or no negative effects on the employment of lowwage workers,” reads a letter signed by prominent pro-minimum-wage economists in 2019.

But this new research, after surveying the field of empirical evidence, finds that reaching these progressive economists' conclusions “requires discarding or ignoring most of the evidence.”

The Takeaway: There’s No Escaping the Trade-Offs of the Minimum Wage

When the government mandates a price for labor—aka a minimum wage—that exceeds the market rate, employers will inevitably purchase less labor. It’s just like consumers would purchase less soda if the government arbitrarily mandated higher prices for it than what it’s actually worth to people. In fact, that’s the exact point of  “soda taxes” passed in the name of public health; they reduce soda consumption. The same thing happens with labor.

The lucky workers who end up being able to keep their jobs may benefit from the artificially high wage, but many others will not find work at all. As far a federal $15 minimum wage is concerned, the nonpartisan Congressional Budget Office estimated that it would eliminate 1.3 to 3.7 million jobs altogether.

This was before the COVID-19 pandemic. Layoffs would likely be much worse now, with so many small businesses already on the brink of collapse amid lockdowns and a struggling economy. 

No amount of empirical squirming can eliminate the reality of trade-offs. Minimum wage proponents bury their heads in the sand in order to argue that you can simply pass a law to miraculously make everyone richer without any consequences. You can’t.

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Brad Polumbo is a libertarian-conservative journalist and Opinion Editor at the Foundation for Economic Education.

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