Every once in awhile, I like to reengage the minimum wage debate. It's such an article of faith on the right that minimum wage increases lead to widespread unemployment, and such an intuitive argument, that society would have to be a pretty bizarre place not to abandon the wrongheaded policy altogether. Except for the fact that, intuitive as the argument may be, and faithful as its rightwing advocates may prove, there's just not much evidence that minimum wage increases have a measurable effect on unemployment.
The foundational study in this area -- which various economists have sought to confirm or reject, all with varying, and often contradictory, success -- is the Card/Krueger survey of New Jersey restaurants that found a slight positive impact on employment. Lots of controversy on that result, but now there's new data from Arindrajit Dube, Suresh Naidu, and Michael Reich checking out San Francisco's restaurants after they instituted an $8.50 minimum wage. As Kash Mansori points out, the results are best explained in this graph, which also shows neighboring Alameda, which didn't have a minimum wage bill passed:
As Kash explains, "The minimum wage goes up in one place, but doesn't change right next door. Employment in restaurants goes up in both places - if anything, by more in the place where the minimum wage went up...Putting all of these different types of papers together, my conclusion is that the best evidence that labor economists can gather from US data seems to indicate that we need not fear major employment losses if we were to increase the minimum wage. The effects may be slightly negative for teenagers, but overall the effect on jobs may be zero to even slightly positive."
Meanwhile, the invaluable folks at EPI have a briefing paper on the likely impacts of raising the national minimum wage to $7.25. For all the talk of teenagers and so forth, 80% of the 15 million affected workers would be older than 20, $7.3 million children would see their parent's income rise (46% of families with a minimum wage worker rely mainly on that income), and so forth. Well worth a read.
Update: Relatedly, here's a recent letter signed by over 650 economists, including five nobel prize winners and six past presidents of the American Economic Association calling for an increase in the minimum wage. That's not to say opponents of an increase couldn't furnish a similar letter -- the point here is that there is not, as the right would like you to think, an economic consensus that raising the wage would be a bad thing.
At Tapped too.
