Flogging a Dead Horse: The CFIB on Minimum Wage
The CFIB havÂ a new study out attacking minimum wages
Their estimate of job losses from a 10% increase in minimum wages is based on elasticities from studies which found significant negative impacts on employment and discounts the many studies which have found very small impacts. The OECD – which is more impartial – has found the effect of minimum wage increases on adult employment to be very small. Moreover, they have found that minimum wage increases reduce the gap between lower and middle income workers, promoting greater equality.
Studies which point to job losses from minimum wage increases ignore the fact that minimum wage increases can be positive for low wage workers even if there is a small reduction in total hours of work. For example, if a $1 increase in a minimum wage of $10 an hour did result in a cut in weekly hours from 35 to 33, the minimum wage worker would still be $13 better off at the end of the week. (33 hours at $11 per hour=$363 vs 35 hours at $10 per hour =$350.)
Other studies have found that there are positive effects of higher minimum wages on productivity. Higher wages reduce turnover and thus training costs, and probably promote greater employer investment in capital and in skills.
(I find that there is now a wealth of good material on positive impacts of minimum wage increases in the archive of this blog for anyone interested in more.)