State Minimum Wage Hikes Already Passed Into Law Expected To Cost 2.6 Million Jobs, New Study Finds
Posted by Tyler Durden on February 2, 2017 11:25 pm
Tags: ATM, Business, Economy, Income distribution, Labor, Labour law, Labour relations, Living wage, minimum wage, Minimum wage in the United States, socialism, unemployment
Categories: ATM Business Economy Income distribution Labor Labour law Labour relations Living wage Minimum wage Minimum wage in the United States socialism unemployment
Even though we know that Bernie and his alt-left compatriots will never tire of their endless “Fight for $15” no matter how much data we throw at them, we thought we would go ahead and highlight yet another economic study detailing the devastating job losses that will result from minimum wages hikes that have already been passed in states all around the country.
The latest study comes for the American Action Forum (AAF) and estimates that 2.6 million jobs will be lost around the country over the next several years as states phase-in minimum wage hikes that have already been passed. Here are the key takeaways:
- In isolation, the minimum wage increases in 2017 will cost 383,000 jobs;
- The entire minimum wage increases currently phasing-in will cost over 2.6 million jobs; and
- Each job lost only leads to an extra $6,900 in total wage earnings across all workers.
Below are the 14 states where the minimum wage is set to increase in 2017 as well as the entire increases anticipated for states where large increases have been passed but will be phased in over several years.
First, AAF estimates that the minimum wage increases planned for 2017 alone will result in 383,000 job losses. The analysis assumes that each 10% increase in wages results in a 0.3% – 0.5% decline in the net job growth rate.
While proposals to raise the minimum wage are well intended, it is important to consider the negative labor market consequences. Meer & West (2015) find that raising the minimum wage reduces job creation. Specifically, they find that a 10 percent increase in the real minimum wage is associated with a 0.3 to 0.5 percentage-point decline in the net job growth rate. As a result, three years later employment becomes 0.7 percent lower than it would have been absent the minimum wage increase.
While the Meer & West (2015) findings may not seem very problematic, when taking into account the magnitude of the minimum wage increases and the number of states implementing new laws, the negative labor market consequences add up. Let’s first examine the minimum wage hikes of 2017 in isolation, without considering previous or future minimum wage increases under the new state laws.
Of course, for most states that have enacted minimum wages increases, 2017 hikes are just one component of multi-year increases. Below is a look at how much minimum wages are expected to increase overall after they’re fully implemeneted.
Using the same correlations between minimum wage increases and net job losses noted above, AAF estimates that 1.8 million jobs will be lost once current increases are fully implemented.
As if that weren’t enough, several states, including California, passed their current minimum wage laws several years ago. Therefore, adding in jobs that have already been lost from current minimum wage legislation, AAF estimates that a total of 2.6 million jobs will be lost courtesty of misinformed liberal agendas.
So goodluck with the continued crusade, Bernie! If you get hungry along the way, we highly recommend you try out a sandwich from this new “Big Mac ATM” which comes with McDonald’s special sauce and all the fixin’s but requires exactly 0 of your minimum wage workers to cook.