To keep employers from taking advantage of their workers, federal law defines an hourly minimum wage. In recent years, the news in California has been filled with reports of efforts to increase these earnings. While opponents and proponents of the increase alike have argued about the consequences this could have, little real-world research was available to support their claims. Here is a rundown of recent studies about the impact that a raise could have on the lives of Americans.
As Forbes details, critics of the minimum wage increases have expressed concern about the impact minimum wage increases will have on small businesses. Early anecdotal evidence has borne out this concern. The Employment Policies Institute has released a collection of one hundred stories of small businesses who have had to reduce their numbers of employees or have gone out of business as a result of local minimum wage increases. Anecdotal evidence lacks the verifiable statistical analysis of formal research studies, but some small business employment statistics have been used to emphasize that this anecdotal evidence is hard to ignore. More than half of new jobs in the US come from small businesses.
Scholarly research reported by Medium comes to a similar conclusion about a possible negative impact of minimum wage increases by focusing on the low-skilled workers who are targeted by the wage increase. Researchers at UC San Diego found that low-skilled workers had higher rates of unemployment during the Great Recession in areas with increased minimum wages. Low-income workers were disproportionately affected by the Great Recession, but these results were magnified in locales that had raised their minimum wage, even when accounting for the housing crisis that fueled the recession.