Study: Minimum wage hikes lead to less employment for low-skilled workers

Thursday, February 25, 2016 by

( A new study has born out critics’ predictions about disproportionately high minimum wage hikes – namely, that they depress employment for low-wage workers.

According to the National Bureau of Economic Research, the study found that minimum wage increases cut employment opportunities for low-skilled workers by some 6 points during the Great Recession.

“This period’s full set of minimum wage increases reduced employment among individuals ages 16 to 30 with less than a high school education by 5.6 percentage points,” the study said.

The author of the study, University of California – San Diego economist Jeffrey Clemens, examined the Current Population Survey in the context of a series of minimum wage hikes that boosted wages from $5.15 per hour in 2007 to $7.25 in 2009, as well as the financial crisis of Sept. 2008, the Washington Free Beacon reported, citing the study.

Workers who did not have a high school education were hit the hardest, the study noted. Unemployment and labor force participation has remained a problem since the economic recovery; the labor participation rate for younger workers with fewer skills plunged from 40 percent to 28 percent between 2006 and 2009, and they remain far behind more skilled labor.

“This group’s employment remained 13 percentage points (33 percent) below pre-recession levels,” Clemens said. In addition, he found, inordinate wage hikes were at least partly responsible for a lack of employment that accounted for some “43 percent of the sustained, 13 percentage point decline in this skill group’s employment rate,” he added.

Raising the federal minimum wage of $7.25 an hour has become a primary focus of Democratic candidates since the Obama White House began a push for increasing the minimum wage to $10.10 in 2011 and 2012. Unions and other labor activists want to rate boosted to $15.00 for fast food workers and others.

“In the year 2015, a job must lift workers out of poverty, not keep them in it.  The current federal minimum wage of $7.25 an hour is a starvation wage and must be raised to a living wage,” Democratic presidential contender Sen. Bernie Sanders, I-Vt., said in a July release.

Meanwhile, Democratic frontrunner Hillary Clinton promoted a $12 wage as the “highest historical average we’ve ever had” at a November debate.

An earlier analysis by the Congressional Budget Office found that raising the federal minimum wage to $10.10 an hour would cause 500,000 low-skilled workers to lose their jobs.

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