Ali Meyer of the Washington Free Beacon details a new report that spells out potential negative economic consequences of a higher government-mandated minimum wage.
Minimum wage increases over the next several years will result in 1.8 million job losses, according to a report from the American Action Forum.
By July of this year, 22 states and the District of Columbia will have implemented minimum wage increases. In just 2017 alone, wage increases will lead to 383,000 job losses.
While the goal of increasing the minimum wage is to increase earnings for low-income individuals, the report finds that the additional earnings transferred from the job losers to the job keepers is minimal. For example, minimum wage hikes are projected to increase earnings by only $6,900, which would be split among all employees affected by the increase.
“While proposals to raise the minimum wage are well intended, it is important to consider the negative labor market consequences,” the report states. “A 10 percent increase in the real minimum wage is associated with a 0.3 to 0.5 percentage-point decline in the net job growth rate.”
“As a result, three years later employment becomes 0.7 percent lower than it would have been absent the minimum wage increase,” the report states.
