Ask This State Whether a Higher Minimum Wage Kills Jobs

Written by Bryce Covert

There’s more real life evidence that a higher minimum wage may not be harmful for job creation.

In their new analysis of small businesses and job growth, Paychex and IHS report that Washington, the state with the highest minimum wage, topped the list for the biggest increase in small business employment, with jobs growing by 2.22 percent over the last year. The state’s minimum wage is currently $9.32, the highest in current law, although a handful of others have passed increases that will bring theirs higher.

Credit: Paychex/IHS

When it comes to cities, the story is the same. San Francisco, which has the highest big city minimum wage at $10.74, was the city with the greatest growth in small business employment. Seattle, which currently follows Washington’s minimum wage, came in a close second.

Credit: Paychex/IHS

Both Washington and Seattle are pushing for even higher minimum wages. Washington Gov. Jay Inslee (D) has proposed raising the wage to somewhere between $10.82 and $11.82. Seattle, meanwhile, appears to have a legislative agreement to raise its minimum wage to $15, which would be the highest in the country. San Francisco’s mayor also supports a higher wage for the city and offered some tepid support for the $15 level.

That city in particular has offered other real world evidence that a higher wage doesn’t necessarily bring economic area to an area. In the seven years after San Francisco increased its minimum wage in 2004, employment in the city grew by more than 5 percent while it fell in other Bay Area counties. Restaurant job growth was particularly strong, despite the strong opposition of large restaurant lobbying groups, increasing by 17.7 percent, faster than any other neighboring area. Washington has also seen positive trends in the 15 years after it increased its wage to a national high. Job growth has stayed steady at a 0.8 percent annual rate, higher than the national one, and employment at restaurants and bars grew by 21 percent.

And while the National Federation of Independent Business, which represents small businesses, vocally opposes increasing the minimum wage, its members actually ranked minimum wage issues at number 52 out of 75 total, while nearly 30 percent said it wasn’t even a problem.

There have been some studies that found a higher minimum wage will hurt job growth, such as a Congressional Budget Office report that estimated a $10.10 wage would reduce jobs by about 0.3 percent. But a different analysis of minimum wage increases at the state level over two decades didn’t find any clear evidence that they affected job creation, even when unemployment was high.

This post originally appeared on ThinkProgress

Photo credit: Thinkstock

123 comments

Jim Ven
Jim Venabout a month ago

thanks for the article.

Janice Thompson
Janice Thompson1 years ago

Cost of living is higher in big cities too.

Jennifer H.
Jennifer H.1 years ago

Interesting differences between the cities. Thanks for the information.

BD M.
EJ S.2 years ago

One more thing to know about restaurant jobs in Washington -- it's a State where all tipped employees have to be paid the full minimum wage, instead of half or less as Federal law requires. So if you wait tables in WA, you get the full State minimum wage of $9+ an hour, plus all the tips you receive. It's a pretty good job here, and restaurants seem to prosper despite their employees making a living wage.

Ros G.
Ros G.2 years ago

Thanks for the article...Agree with Ben...Australia's minimum wage is just over $16 ph

Theresa Robinson
Theresa Robinson2 years ago

ENOUGH TALK, AND PUT THE WAGES UP. Theresa Robinson.

Ben Oscarsito
Ben Oscarsito2 years ago

Minimum wage...anything less than $15 an hour is a bloody joke!

Jonathan Harper
Jonathan Harper2 years ago

noted

ScoTT S.
ScoTT S.2 years ago

I laugh at the criticism about a higher standard of living. How do you think the standard of living got higher in the first place? Because people were making higher wages and could afford more and could spend more? Rep/Cons what you call logic is what I call fallacy.

ScoTT S.
ScoTT S.2 years ago

WalMart is being criticized for low wages that make it so that their employees are encouraged by WalMart to go on welfare to make up the difference. Keeping wages low is HELPING the economy exactly how? Getting people off welfare by paying them a living wage is HURTING the economy how?