$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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