California Minimum Wage Hike Will Result in Job Loss for Low-skilled
Indexing wage to inflation will put entry-level job market into a tailspin
Publication Date: March 2006
Topics: Minimum Wage
Washington, DC—The California State Legislature will hold hearings today over three bills to increase the minimum wage and the Employment Policies Institute [EPI] advises lawmakers not to ignore decades of economic research concluding that mandated wage hikes put low-skilled employees out of work.
Research dating back to the creation of the minimum wage in 1938 clearly show that increases in the minimum wage decrease employment, particularly for the least-skilled and most vulnerable in the economy:
? Cornell University economists found that adult high school dropouts and African American young adults suffer four times more employment loss from a minimum wage hike than their more educated and non-black counterparts, respectively.
? Research from Duke University found that these low-skilled employees lose their jobs to more skilled applicants—often teenagers from wealthy families who did not even search for a job at the previous minimum wage.
? A Johns Hopkins University study found that African American and Hispanic teens and teens in central cities are more likely to become idle, neither-enrolled in school and nor-employed, as a result of a minimum wage increase.
“We know a single minimum wage hike is a job killer. What’s worse is that lawmakers are considering indexing the wage to inflation which will essentially put the state economy on auto-pilot,” said Mike Flynn of the EPI. “It’s beyond me why California legislators would voluntarily cede control over an important segment of the economy.”