Big Deal

A new review of data by the Department of Labor shows that states which hiked their minimum wages experienced higher job growth in 2014 than those that did not.

Opponents of minimum wage laws – who generally satisfy themselves by opposing minimum wage increases – will rightly say that this does not prove that higher a higher minimum wage doesn’t reduce job growth, let alone that it increases it. It is too short a period of time and there are numerous additional factors in play. But it’s a pretty good chunk of evidence against those who treat it as as truism that mandated marginal increases in labor costs at the bottom of the scale automatically leads to fewer jobs.

From a certain simplistic classical economics perspective it should be a truism. Increase the cost or low-wage scale labor and that should limit or retard the number of people buying it. But actual human societies and complex economies don’t necessarily work that way. Even real classical economics isn’t that simplistic. And there are a handful of very probative studies going back to the early-90s which provide pretty strong evidence challenging this assumption. Here’s one very good example.