Study: States with higher minimum wages had higher unemployment

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Breanna Deutsch Contributor
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A new study by the free-market American Action Forum found that states with minimum wages higher than the federal minimum suffer from higher unemployment.

Researchers looked at labor data from both the nineteen states that as of 2013 had enforced minimum wages above $7.25 per hour and the thirty-one states that had minimum wages equal to $7.25.

Overall, they found that just a $1 increase in the minimum wage was “associated with a 1.48 percentage point increase in the unemployment rate,” and a “0.18 percentage point decrease in the net job growth rate.”

A higher minimum wage thus led to the unemployment of 747,700 workers and a job growth reduction of 83,300 jobs, the study claims.

The study noted that minimum wage hikes especially took a toll on the employment opportunities for young and low-skill workers.

Focusing in on 16-to-19-year-olds, researchers found that the “mean annual average teenage unemployment rate in states with minimum wages above $7.25 per hour in 2013 was 22.5 percent, which was 2.0 percentage points above the 20.5 percent mean annual average unemployment rate in states with minimum wages at $7.25 per hour.”

Furthermore, “In high minimum wage states, the net job growth rate for teenagers was actually negative in 2013, with a mean annual average rate of -0.5 percent.”

“This was 2.3 percentage points lower than the mean annual average net job growth rate among states with the federal minimum wage. In those states teenage employment levels increased 1.8 percent from 2012 to 2013,” said the report.

These figures are worth noting, said the authors, because teenagers made up 24.2 percent of all minimum wage earners in 2013.

Researchers also addressed the state of Washington, which has the nation’s second highest minimum wage — $9.32 an hour — but hasn’t experienced job growth problems.

In particular, wrote the authors, “The high net job growth in states like Washington could in part be causing lawmakers to raise their minimum wages because they can afford to do so.”

Last year, laws to raise the minimum wage were approved in five states, the District of Columbia, the City of SeaTac in Washington, and Montgomery and Prince George’s counties in Maryland.

And since the president State of the Union Address in January where he urged states to bypass Congress and “give America a raise,”
Connecticut and Delaware hiked their state minimum wage and another 30 states are considering doing the same.

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