Study: Raising Minimum Wage Means Higher Wages but Fewer Jobs

Published 04/01 2014 12:58PM

Updated 04/01 2014 01:03PM

WTVO/WQRF -- The push for a higher minimum wage is creating push back by those who contend it will hurt job creation at a time when unemployment remains too high nationwide.

The latest study to show the employment impact of raising the minimum wage as reported by FOX Business is from the conservative-leaning American Action Forum.  Their study looked at the 19 states that have minimum wages above the national rate of $7.25 an hour including Illinois, and also the 31 states in which the minimum wage is set at the federal level including Wisconsin and Iowa. 

The report finds that in 2013, a $1 increase in the minimum wage was associated with a 1.48 percentage point increase in the unemployment rate and a 0.18 percentage point decrease in the net job growth rate.  Regionally, Illinois' minimum wage is currently $8.25 per hour while Wisconsin and Iowa's are set at the federal $7.25 per hour level.  Illinois' unemployment rate according to the federal Bureau of Labor Statistics is 8.7%, Wisconsin's is 6.1% and Iowa's rate is 4.4%.

Teens who typically use minimum wage jobs to enter the workforce and gain job skills saw the biggest hit according to the report.  A 4.67 percentage point increase in the teen unemployment rate and a 4.01 percentage point decrease in the teenage net job growth rate. 

Nationwide, the report shows that high state minimum wages increased unemployment by 747,700 workers and reduced job growth by 83,300 jobs.

The report from the conservatively aligned group does support findings from a recent non-partisan Congressional Budget Office study of raising the minimum wage which indicated it would lift full-time minimum wage workers out of poverty, but at a cost of an estimated 500,000 jobs nationwide.

Both their findings show that raising the minimum wage would involve a trade-off -- providing higher wages to minimum wage workers but at the cost of fewer job opportunities for them.

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