States That Increased Minimum Wage Have Seen 40% Faster Job Growth Than Those Who Didn’t

There’s has been a big debate lately about whether or not raising the minimum wage is a good thing for the overall economic health of America.

On one side, those in favor say that putting more disposable income into the pockets of consumers would mean that they purchase more stuff, increasing sales and profits for businesses.

On the other side, those opposed mainly argue that raising the minimum wage will increase costs for employers, forcing them to lay off workers to avoid having to increase how much they spend on wages.

Well, new data released by the Department of Labor just dealt a blow to that opposing argument.

The report, released on Friday, found that the 13 states that recently increased their minimum wages saw an average job growth of 0.85% for the first six months of 2014. The 37 states that didn’t raise the minimum wage saw job growth of only 0.61%.

Though the data has a small sample size (only 6 months) and doesn’t necessarily establish cause and effect between higher minimum wages and job growth, it definitely pokes a big hole into the idea that raising the minimum wage leads to a disaster in the job market.

The Economist also points out that the U.S. minimum wage is relatively low compared to other developed countries around the world.

The OECD (Organization for Economic Co-operation and Development) compiles and compares economic data for different countries. One of its indicators of economic health is how the minimum wage in a country compares to its median and average wages.

Minimum wage compared to average wage for a number of developed countries. Click to enlarge
Minimum wage compared to average wage for a number of developed countries. Click to enlarge

The American minimum wage is only 38% of the median wage and 27% of the average wage. These numbers are lower than almost every other country on the OECD’s list.

Also worth noting, Costco, which pays it’s employees a minimum of $15 an hour, has been outperforming Wal-Mart in profitability recently.

Read the original story from NPR here.


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