Research Shows a 70% Increase in Minimum Wage would not lead to Job Losses

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The current Federal minimum wage is set at $7.25 an hour equals an annual full time earning of $15,000. There are currently seventeen states actively working on raising the their minimum wage or have already raised it. Economist have looked into the possible affects raising the minim wage could have on businesses, the major concern being job losses. The current stockpile of economic research on minimum wage suggests that past increases have not caused any notable job losses, in other words, minimum wages in the United States have yet to be set too high.

The state of Arizona had a minimum wage increase of 31% in 2006, from $5.15 to $6.75. The average restaurant would expect to see a slight increase in cost of 1% and 2%, raising the price of a meal from $10.00 to $10.20. “In fact, if we use past experience as a guide, businesses should be able to adjust to a jump in the minimum wage as great as 70%.” This increase would put the minimum wage to $12.30.

Businesses should be able to adjust to a jump in the minimum wage as great as 70%. That would push the federal minimum wage up to $12.30. In states with average living costs, full-time earnings at $12.30 per hour can cover the basic needs of the typical low-income working household.
If the federal minimum rate were 70% higher, or $12.30, it would still fall short for two major groups of workers. First, one-worker families raising young children need generous income supports in addition to minimum wage earnings to help cover the high cost of raising children. Second, minimum-wage workers who live in expensive areas, such as New York City and Washington, D.C., require affordable housing programs.
A 70% minimum-wage hike is the biggest one-time increase that U.S. businesses can absorb without cutting jobs, but it’s not the end of the story. In the future, the minimum wage can inch further upward directly benefiting low income


Jeanette Wicks-Lim, “How High Could the Minimum Wage Go?,” Dollars and Sense, July-August 2012.

Jeanette Wicks-Lim  and Jeffrey Thompson, “Combining Minimum Wage and Earned Income Tax Credit Policies to Guarantee a Decent Living Standard to All U.S. Workers,” Political Economy Research Institute, University of Massachusetts, Amherst, October 2010.

Student Researcher: Adriana Inocencio, Sonoma State University

Faculty Evaluator: Suzel Bozada-Deas, Sonoma State University