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$15 Minimum
How Much Job Loss Is Too Much?

It’s getting harder and harder for minimum wage boosters to deny that there are real tradeoffs involved in a minimum wage hike. The latest evidence: A new review paper published by the Federal Reserve Bank of San Francisco concludes that “a reasonable estimate based on the evidence is that current minimum wages [both state and federal] have directly reduced the number of jobs nationally by about 100,000 to 200,000, relative to the period just before the Great Recession”

The paper’s author, David Neumark of the University of California, Irvine, points out that this is a relatively small reduction relative to the total number of jobs created over this period, and that it “should be weighed against increased earnings for still-employed workers because of higher minimum wages.” These are reasonable points—but it’s not at all clear that they will still apply if minimum wage campaigners continue to get their way, and $15 dollar minimums are implemented in more states and localities across the country. The CBO has predicted that increasing the federal minimum to $10.10 (from the current $7.25) could cost up to a half-million jobs; the number of jobs destroyed by a $15 minimum could well total in the millions (although no one really knows, since there is no historical parallel for a hike this steep).

The numbers could be debated ad nauseam, but it’s worth taking a step back and wondering: If an anti-poverty strategy necessarily destroys hundreds of thousands of jobs for the most vulnerable workers, is it really the best anti-poverty strategy available? As we’ve argued before, steep minimum wage hikes threaten to create a permanent underclass of citizens who are shut out of the labor force and unable to get the skills they need for a meaningful career. Surely there are better ways for the government to ensure (as it should) that all working people have a basic, decent standard of living.

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  • Boritz

    “basic, decent standard of living”

    What? That is so last century.
    Income equality. Say it. Income equality.

    • Jmaci

      For a real eye-opener on this subject read Joel Kotkin’s “The New Class Conflict.”

  • Fat_Man

    The entire intention of Democrat economic policy is to reduce the working class (the Morlocks) to unemployment and penury, cause the disintegration of their families, blight the prospects of their boys, turn their girls into prostitutes, and spread drug addiction and welfare dependency. The Morlocks will be forced to vote for Democrats to maintain their welfare payments. Carefully planted memes of ethnic resentment will prevent the Morlocks from allying into large bodies that could wage war against the elite. Family disintegration, and the bureaucratized and industrialized “public education” system will stop them from obtaining educations and joining the elite.

    It is not the product of good intentions. Men are held to intend the natural and probable consequences of their actions. Every elite wants to make sure the outsiders are helpless and weak. The coastal elite of blue America are no different. And, not it is not racial. If you think that please read:

    “The White Ghetto: In Appalachia the country is beautiful and the society is broken.” By Kevin D. Williamson • January 9, 2014 http://www.nationalreview.com/article/367903/white-ghetto-kevin-d-williamson

    In New York City, a $15/hr. minimum wage will marginalize some recent immigrants. Imagine what it will do in the hinterlands where where a $10/hr. job is a good job. It would make legal employment impossible in large swathes of flyover country, It is not a good policy, it is not a humane policy, and it is not well intended.

    • Jim__L

      I’ve been around enough well-meaning Lefties (i.e., “useful idiots”) to think that this is not in every case the product of ill intentions..

      The first paragraph is where we’re headed though, and that’s why people are lashing out.

      • Fat_Man

        Second sentence of the second paragraph. The onus is on them to prove the purity of their intentions.

      • Boritz

        You are right about well-meaning, and that is by far the most insufferable variety.

  • rheddles

    No matter what law is passed, the minimum wage is and always be $0.00. That’s what an unemployed person makes. And if their marginal productivity is $0.01 less than the legally mandated minimum wage, that is what they will get. Minimum wage laws are a violation of our right to pursue happiness.

  • iconoclast

    “Surely there are better ways for the government to ensure (as it should) that all working people have a basic, decent standard of living.”

    The first issue is that it isn’t the business of government to ensure that all working people have what politicians and demagogues consider a decent standard of living. But that doesn’t leave any room to purchase votes however.

  • Jim__L

    If we’ve still got a huge problem with labor force participation, isn’t *any* job loss too much?

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