Congressional Democrats’ $12 Minimum Wage Proposal Would Cost 770,000 Jobs, Say Economists
Today’s news conference featuring Labor Secretary and activist groups overlooks real-world examples of harm from similar wage hikes
Publication Date: April 2016
Washington D.C. – Today, the Employment Policies Institute (EPI) is highlighting recent economic research finding that a $12 federal minimum wage would cost 770,000 jobs. It is also highlighting stories of small businesses that have been forced to reduce job opportunities because of recent local minimum wage increases.
This morning, Congressional Democrats including House Minority Leader Nancy Pelosi, Labor Secretary Tom Perez, and activist groups are holding a press conference to call for a raise in the federal minimum wage. The event features Sen. Patty Murray (D-WA) and Rep. Robert Scott (D-VA), who last year introduced legislation to raise the federal minimum wage by 66 percent to $12.
In 2014, the nonpartisan Congressional Budget Office estimated that a $10.10 federal minimum wage would cost 500,000 jobs nationally. Applying the same methodology used by the CBO, Drs. William Even of Miami University and David Macpherson of Trinity University conclude that a $12 minimum wage would cost 770,000 jobs nationally.
Using Current Population Survey (CPS) data, the economists estimated the number of jobs lost from a $12 minimum wage in each state, which range from 558 jobs in Vermont to 46,000 in Florida. View a table with the number of jobs lost by state here.
CPS data shows that roughly 60 percent of those affected by a $12 mandate are secondary or tertiary earners in their families. The average household income of those affected by the proposed wage hike is $55,800. Only 9 percent of those affected are single parents.
View the full report here.
Cities that have already dramatically raised their minimum wages are seeing the consequences first hand. Oakland, which raised its minimum wage to $12.25 last year, saw 10 grocery stores and restaurants close in its Chinatown neighborhood partially because of the wage hike. Childcare providers in the city have had to reduce hours, cut employee shifts, and limit childcare slots because of the costs associated with the wage hike.
In nearby Berkeley, whose minimum wage is currently $12.53, the coffee shop Mokka decided it will close this summer primarily because of the minimum wage increase. Black Oak Books, a large independent bookstore in the city, closed its doors after 33 years partially because of the wage hike.
Across the Bay in San Francisco, whose minimum wage is currently $12.25, numerous restaurants, including Abbot’s Cellar, Source, Luna Park, and Roosevelt Tamale Parlor, have closed citing the minimum wage increase as a determining factor. (Specific stories can be found on Facesof15.com.)
A recent paper from the Federal Reserve Bank of San Francisco summarized the research on minimum wages increases, and confirmed that past hikes have measurably reduced job opportunities.
“Labor activists pushing a federal $12 minimum wage should stop and look at the economic and real-world evidence which shows why it’s a bad idea,” said Michael Saltsman, research director at the Employment Policies Institute. “The legislators’ good intentions are cold comfort for those who find themselves out of a job.”