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November 20 2015

New study: $12 minimum wage could destroy 800,000 jobs, hurt poor millennials

Red Alert Politics
Celia Meyer

A new study cautions that a $12 minimum wage could lead to a nationwide loss of almost 800,000 jobs if such an increase were implemented.

The job losses impact middle-income families and low-income families the most.

Following the methodology of a 2014 Congressional Budget Office report, Drs. William Even and David Macpherson, economists at Miami University of Ohio and Trinity University respectively, found that 770,000 jobs would be lost, according to the Independent Women’s Forum.

Those jobs would be a cumulative loss between 2014 and 2020.

The study was conducted for MinimumWage.com, a project of the Employment Policies Institute. EPI has funded previous research on the effects of a minimum wage in Maine.

Job losses would be strongest in Texas (92,000 jobs lost), Florida (46,000), Pennsylvania (40,000), North Carolina (37,000), and California (37,000).

Even and Macpherson estimate that 43 percent of job losses would affect middle-income families and 41 percent would affect low-income families.

When a minimum wage increase takes effect, job loss is an area for concern, but so are wage gains by employees who keep their job. According to the study, however, those wage gains are not a boon for low-income families.

“Contrary to the claims of minimum wage proponents, who argue that the minimum wage needs to be raised to help those in poverty, the analysis finds that the average family income of those affected by the proposed wage hike is $55,800 – around three times the federal poverty line.”

Workers would get a larger paycheck, but it would have a small impact on poverty alleviation, especially given the job losses. A majority of minimum wage earners aren’t the primary income source for their families. The study finds that “only 9 percent of those affected by the wage hike are single parents,” which blunts the effect desired by minimum-wage advocates.

Hopes that the minimum wage, even with job losses, could spur significant income gains for low-income families pop up after minimum-wage studies, but if this study’s claims hold out, the position is difficult to defend.

The average effects of the minimum wage seem to favor middle-income families over low-income families. While other factors affect job growth, wage increases, and employment rates, the minimum wage as a poverty-reduction strategy isn’t as cut-and-dry as some politicians like to think. In some cases, it actively hurts rather than helps.

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Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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