Conservative Myths on Minimum Wage Have Dangerous Implications

Supporters of a $15 minimum wage for fast food workers rally in front of a McDonald's on Wednesday, July 22, 2015, in Albany,
Supporters of a $15 minimum wage for fast food workers rally in front of a McDonald's on Wednesday, July 22, 2015, in Albany, N.Y. (AP Photo/Mike Groll)

Old ideas die hard. Especially among Republican Presidential candidates.

For years, Republicans have argued that increasing the minimum wage kills jobs. "The minimum wage," Ronald Reagan argued in 1980, causes "more misery and unemployment than anything since the Great Depression."

In her 2011 Presidential campaign, Michele Bachmann went for the gold in the conservative hyperbole Olympics, claiming that abolishing the minimum wage would "virtually wipe out unemployment completely."

In 2016, they're back. This November, Marco Rubio denounced minimum wage increases as a job-killing "disaster." Republican frontrunner Donald Trump defended a low minimum wage on the grounds that wages are "too high." And Ben Carson recently declared, "Every time we raise the minimum wage, the number of jobless people increases."

Is Carson right? I evaluated Carson's claim at face value, using new data from the Bureau of Labor Statistics. In 2012, 10 states voted to raise minimum wage. Did the "number of jobless people" increase in all of those states over the November 2012 to November 2015 period?

No. In fact, it increased in none of those states. Zero out of ten. Carson must have an interesting definition of "every time."

Specifically, Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont and Washington all voted to raise their state minimum wages in November 2012. And every single one had a lower unemployment rate in November 2015 than in November 2012.

If raising the minimum wage hurts unemployment severely, as conservatives claim, why is unemployment plunging in these 10 states?

Overall, the net change in unemployment in these 10 states roughly matched the overall national decline in unemployment. Half of these states -- Florida, Ohio, Oregon Colorado, and Rhode Island -- actually saw their net changes in unemployment rates from November 2012 to November 2015 drop more than the national net change of 2.7 per cent.

Consider Rhode Island. Of the 10 states that raised the minimum wage in 2012, the Ocean State raised the minimum wage by the largest amount. Yet over the past three years, it has experienced the sharpest decline in unemployment among these 10 states. Unemployment plummeted from 9.9 per cent in November 2012 to 5.2 per cent in November 2015.

A job-killing disaster, indeed.

Of course, none of this will come as a surprise to academics who study labor economics. Ever since Princeton colleagues Alan Krueger and David Card began questioning the job loss myth in the 1990s, there has been a growing consensus that raising the minimum wage does not reduce employment.

In fact, it can do the opposite. In 2014, over 600 economists -- including 7 Nobel Laureates and professors at Yale and Harvard -- signed a statement supporting a higher minimum wage of $10.10. They noted:

The weight of evidence now [shows] that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.

By increasing consumer spending and productivity, reducing worker turnover, and lifting millions of out poverty, raising the minimum wage creates jobs.

Ultimately, paying people more than poverty wages doesn't just help workers. It strengthens the foundation of our economy and paves the way for growth.

But don't expect the Republicans running for President to change their positions and rhetoric. Minimum wage policy is one of many areas in which they are out of step with empirical evidence. United by their aversion to facts, they deny everything from the scientific consensus on climate change to the enduring failure of supply-side economics.

Yet there are real consequences to letting wages stagnate for the working poor. Millions will be left in poverty. Thousands of small businesses will face debilitating job turnover costs. As the next President prepares his or her agenda, we shouldn't let extreme rhetoric and outdated thinking distract from the economic and moral imperatives of raising the minimum wage.

Duncan Hosie is a political activist and blogger. Follow him on Twitter and Instagram @DuncanHosie.