By Tim Pearce
Raising the minimum wage has cost young and low-skilled workers thousands of jobs in the fast-food restaurant sector since 2013, according to University of Wisconsin economics professor Noah Williams.
Williams tracked and compared employment data in Minnesota and Wisconsin from 2014 to 2018, over which Minnesota’s minimum wage increased incrementally from $6 an hour to $9.65 in January 2018. Wisconsin’s minimum wage remained at the federal level of $7.25 an hour, the Minnesota Watchdog reported.
Generally, as the minimum wage increases “businesses will demand less labor, which could mean fewer workers and/or shorter hours per worker,” Williams said, according to Minnesota Watchdog. “There were workers willing to work for wages that were less than the new, higher minimum wage and businesses that were willing to hire them for that … The distortion is that the minimum wage rules out mutually beneficial agreements between workers and firms.”
The fast-food industries in both states were growing at similar paces in 2014 when the minimum wage of each rested on the federal level. As the Minnesota’s minimum continued to rise, a disparity between employment growth in each state’s fast-food industry developed and widened.
“In total, from July 2014 to May 2018, employment at fast-food restaurants grew by 4.8 percent in Minnesota, but by 8.8 percent in Wisconsin,” Williams said. “While other factors may have played a role, the timing of the trend break suggests that the minimum-wage increases in Minnesota accounted for much of this four percentage-point gap.”
Minnesota’s minimum wage increase is helping raise wages and lift families out of poverty, Minnesota Gov. Mark Dayton said in a December statement before the final raise was mandated.
“In 2014, I worked with the DFL Legislature to raise Minnesota’s minimum wage three times and to increase it thereafter with inflation,” Dayton said. “Now, that law will further boost incomes for more than 250,000 Minnesotans and their families who are working hard to lift themselves out of poverty.”
More than half — about 54 percent — of those making the minimum wage or less in Minnesota are age 24 or younger, the Minnesota Watchdog reported.
Minimum wage laws in a dozen states will cost the U.S. roughly 261,000 new jobs in 2018. New York will be hit the hardest where various state and municipal minimum wage hikes will suppress job growth by nearly 100,000, according to a study by the American Action Forum, a free market advocacy group.
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