2014 Job Creation Faster in States that Raised the Minimum Wage

[grahamhgreen]

http://www.cepr.net/index.php/blogs/cepr-blog/2014-job-creation-in-states-that-raised-the-minimum-wage

As CEPR noted in March and April posts, economists at Goldman Sachs conducted a simple evaluation of the impact of these state minimum-wage increases. GS compared the employment change between December and January in the 13 states where the minimum wage increased with the changes in the remainder of the states. The GS analysis found that the states where the minimum wage went up had faster employment growth than the states where the minimum wage remained at its 2013 level.

When we updated the GS analysis using additional employment data from the BLS, we saw the same pattern: employment growth was higher in states where the minimum wage went up. While this kind of simple exercise can't establish causality, it does provide evidence against theoretical negative employment effects of minimum-wage increases.

In this post, we can now bring these figures up to date with the data from April and May.

The chart below shows the percentage change in employment for each state. The baseline is the average of the employment figures for the last five months of 2013 (August to December), which is measured against the average of the employment levels for the first five months of 2014 (January to May). As was the case with the earlier analyses by GS and CEPR, employment growth is still faster in states where the minimum wage went up.

[unblock]

1. economies function best when kept in balance. "supply-side" stimuli help when supply-starved.

but when was the last time we were supply-starved?

rising and record levels of inequality, the long and lame recovery, low inflation, asset bubbles (treasuries, debt, and possibly equities), etc. all point to a demand-starved economy.

in a demand-starved economy, supply-side efforts, such as tax cuts and austerity, make the problem worse; and demand-side efforts, such as helping poor people spend, is an even better investment than it usually is.

[LuvNewcastle]

3. Agreed.

Different times and situations require different solutions to problems. One economic model, especially a flawed one, cannot be used to fix a broken economy.

[pampango]

2. Not going to convince conservatives with data and studies (you know - facts).

If the 'job-creators' use fear and emotion to tell the base that lower wages is good for job growth, well let's just say that is more effective than citing studies and facts.

[HereSince1628]

4. Good social outcomes are not going to convince owners/CEOs

who see any increased labor cost to the business they control as bad.

[pampango]

6. True. The sad thing is that the owners/CEO's are able to convince so many in their base

that lower wages are good for them, too.

[grahamhgreen]

9. We don't need to convince them. It's good fuel for D's to take to America.

This is about increasing wages by passing laws, not begging

[HereSince1628]

10. True, but there are a lot of corporate friendly, neoliberal D's

who don't prioritize social values over profits.

Indeed, the cart the donkey is pulling seems overwhelmingly full of profit promoting privatizers

[Populist_Prole]

11. Bingo. Well said.

While we of course we know all too well they don't care about social outcomes, good or otherwise, they're so in the thrall of short term thinking they don't care that more spending power in the hands of the masses is actually better for business....their business, too. Of course that's just too far beyond next quarter for them to care about.

[Amonester]

7. The 'job-cReatoR$' cite their own studies and facts (with convenient 'spreadsheet errors') 2

to impose their economy-cRippling AUTErITY theorie$$$$$$$$$ (=$$$$$ for themselve$).

[Gothmog]

5. This is not surprising

Raising the minimum wage puts more money into the system and increases demand which increases employment

[snot]

8. K&R'd.