The evidence continues to mount that minimum wage hikes have economic costs: A Federal Reserve Bank of San Francisco review paper recently found that minimum wages had “directly reduced the number of jobs nationally by about 100,000 to 200,000.” And now a new survey of recent data by Jed Graham of Investor’s Business Daily (h/t RCP) found that minimum wage hikes seem to have taken a toll on hiring in some of America’s major metropolitan areas:
Hiring at restaurants, hotels and other leisure and hospitality sector venues slowed markedly last year in metro areas that saw big minimum-wage hikes, new Labor Department data show [. . .]
The big shortcoming in the available data for 5 of the 6 cities is that they cover broad metro areas, far beyond the city limits where wage hikes took effect. Still, the uniform result of much slower job growth in the low-wage leisure and hospitality sector, even as the pace of job gains held steady in surrounding areas, sends a pretty powerful signal.
It’s important to remember that most of these hikes are much more modest than the $15 dollar minimum that is now officially part of the Democratic Party platform. A hike of that level is unprecedented in American history, so the real impact on job creation is anyone’s guess.
Even a piece published today at the New Republic stated:
Nonetheless, economists themselves have debated how minimum wages affect employer decisions for many years.
In 1994, economists David Card and Alan Krueger were the first to provide some evidence that such effects may be small. But more recently, a consensus has generally emerged that changes to minimum wages have strong effects on jobs growth.
It may be that minimum wage boosters will ultimately be forced to the argument enunciated by Robert Reich, a sharp thinker and a sometime TAI contributor: Yes, dramatic minimum wage hikes might risk destroying large numbers of jobs, but that is a sacrifice worth making so that all workers can be safely out of poverty without government assistance. But that position still doesn’t fly: Severing low-skilled workers’ connection to the labor market—where they could ideally attain the skills they need to earn a higher-paying job—is cruel, even if it is undertaken with the best of intentions.