Everyone (okay, every economic conservative) knows that raising the minimum wage kills jobs. If employers have to pay more per hour, they will hire fewer people. Obvious.
Except real life doesn’t seem to work that way. Washington Monthly recently reported on the experience of states that ignored the conventional wisdom and raised their minimum wages.
Such hikes were not without opposition. Notably, fast food companies sounded the alarm over the possible consequences of minimum wage hikes—namely, that consumers would pay higher prices and companies would be forced to cut jobs….
Six months after California’s minimum wage rose to $9, the state’s job growth continues to outpace nearly every other state in the country. In November, California added more than 90,000 jobs, its highest single-month total in almost two decades.
The Golden State is not alone. Of the 13 states that saw minimum wage hikes go into effect on January 1, all but New Jersey saw positive job growth in 2014. And as a group, those 13 states averaged significantly higher job growth than states that did not raise the minimum wage.
It turns out that decisions to hire more workers are determined more by things like consumer demand than wage levels.
In fact, demand is far and away the most important factor in job creation. So when wages rise, and poorer people have more money to spend, they spend it. Demand increases. The economy improves. Everyone benefits–including the rich. (Except, evidently, in New Jersey…I wonder what/who Chris Christie will blame…)
In 2015, 21 additional states are set to raise their minimum wage. It will be interesting to see what happens–and, if there is a repeat of the experience of 2014– how the ideologues will spin the results.