How Have Minimum Wage Increases Affected Employment Levels and New Hiring?

The arguments for or against minimum wage increases often include employment issues. Critics of rate hikes believe the increases interfere with an employer's resources to hire more workers.

Some proponents of an increased minimum wage believe it helps bring many people out of poverty and even improves the economy because they spend more money. Research has shown both job loss and no negative impact on job growth from hikes in the minimum wage.

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Dr. Joseph Sabia of the University of Georgia analyzed state minimum wage increases and found that it led to decreased employment, especially for low-skilled workers, according to the Employment Policies Institute.

Dr. Sabia examined data from 1979 to 2004 and found a decline of 0.9 to 1.1 percent in the retail sector and 0.8 to 1.2 percent in small business employment following a 10 percent increase in the minimum wage.

A 4.6 to 9 percent decrease in teen employment for small businesses was linked to a 10 percent increase in the minimum wage. There was a 2.7 to 4.3 percent decline for teens in the retail sector.

However, Think Progress reported on a research project that found no negative impact on employment with raising the minimum wage. Researchers from the Center for American Progress and the University of North Carolina analyzed five studies.

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They found that there were no significant effects on employment levels after minimum wage increases, even during periods of high unemployment. The increases ranged from seven to 12.3 percent. Boost in demand and turnover reduction may have offset the higher wages, according to Think Progress.

Still, unemployment concerns are included in analyses of the potential for job loss when the minimum wage increases are considered.The Congressional Budget Office reviewed the possible impact following proposals to raise the federal minimum wage from $7.25 an hour to $9 or $10.10.

Although a minimum wage increase would increase family income for many low-wage workers and lift some out of the poverty level, the CBO estimated that 500,000 people would lose jobs by the second half of 2016 if the $10.10 minimum wage were adopted. Employment would be reduced by about 100,000 workers if the $9 option were implemented.

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