Study: Minimum wage laws increased unemployment, slowed job creation in 2013



In 2013, minimum-wage increases were associated with increases in unemployment and decreases in job growth, with teenagers hit especially hard, according to a new research paper from the American Action Forum.

“[T]he analysis finds that in 2013, a $1 increase in the minimum wage was associated with a 1.48 percentage point increase in the unemployment rate, a 0.18 percentage point decrease in the net job growth rate, a 4.67 percentage point increase in the teenage unemployment rate, and a 4.01 percentage point decrease in the teenage net job growth rate,” writes AAF researcher Ben Gitis. “Consequently, high state minimum wages increased unemployment by 747,700 workers and reduced job growth by 83,300 jobs.”

The study found that minimum wages set above the federal minimum wage have disproportionate impacts on teenage laborers (ages 16-19) who are inherently less skilled and thus more likely to make a minimum wage.

Maine’s minimum wage, at $7.50 per hour, was associated with a .37 percent increase in the general unemployment rate and a 1.17 percent increase in the teenage unemployment rate. In terms of job numbers, the study found that Maine’s minimum wage was associated with increase unemployment in the general population of 2,600 and 400 in the teenage population.

“The results imply that in 2013, the higher the minimum wage, the more substantial the increase in the unemployment rate,” wrote Gitis.

The report follows the release of research from the non-partisan Congressional Budget Office which showed that raising the minimum wage to $10.10 as President Obama has proposed would result in the loss of 500,000 to 1 million jobs nationally.


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