States That Raised Minimum Wage See Faster Job Growth Than Those That Didn't

The news that states which increased the minimum wage experienced higher job growth than than those that did not is really not that surprising.

Logic dictates that increasing the amount of capital circulating in a local or regional economy, especially a consumer-driven economy like that that exists in most of the US, means that more consumer/employees will have more income to spend which, in turn, will stimulate other enterprises to expand their operations and will encourage entrepreneurs to establish new businesses. The geographical, sociological and economic breadth of the states increasing minimum wage supports that contention.

This is especially true because the industries most likely to be impacted by such a minimum wage increase are precisely those that are projected to be the source of the greatest current and future job demand, which is to say those service industries that need the most workers - and which can benefit most from reductions in turnover, frequently tied to inadequate compensation.

This logic, however, is often lost in the ideological sparring over moralistic arguments about whether paying people more is 'right,' though whose interpretation of what is right leaves lots of room for disagreement. What remains certain, however, is that the laws of economics respond to irrefutable demands whose inputs and outcomes leave little room for moralizing. JL

Scott Neuman reports in NPR:

 "America's minimum wage has long been low by international standards, equalling just 38% of the median wage in 2011, close to the lowest in the OECD. The wage was last raised, to $7.25 per hour, in 2009. Since then its real value has slipped back to where it was in 1998."
New data released by the Department of Labor suggests that raising the minimum wage in some states might have spurred job growth, contrary to what critics said would happen.
In a report on Friday, the 13 states that raised their minimum wages on Jan. 1 have added jobs at a faster pace than those that did not. The data run counter to a Congressional Budget Office report in February that said raising the minimum wage to $10.10 an hour, as the White House supports, would cost 500,000 jobs.
The Associated Press writes:

"In the 13 states that boosted their minimums at the beginning of the year, the number of jobs grew an average of 0.85 percent from January through June. The average for the other 37 states was 0.61 percent.
"Nine of the 13 states increased their minimum wages automatically in line with inflation: Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont and Washington. Four more states — Connecticut, New Jersey, New York and Rhode Island — approved legislation mandating the increases."

The AP notes: "[The] state-by-state hiring data, released Friday by the Labor Department, provides ammunition" to the camp in favor of raising the minimum wage.

"Economists who support a higher minimum say the figures are encouraging, though they acknowledge they don't establish a cause and effect. There are many possible reasons hiring might accelerate in a particular state.
" 'It raises serious questions about the claims that a raise in the minimum wage is a jobs disaster,' said John Schmitt, a senior economist at the liberal Center for Economic and Policy Research. The job data 'isn't definitive,' he added, but is 'probably a reasonable first cut at what's going on.' "

There are competing schools of thought among economists on the impact of raising the minimum wage. As The Washington Post notes: "Some studies, notably those lead by UMass Amherst economist Arin Dube, argue that there are no adverse employment effects from small increases in the minimum wage. Other studies, notably those lead by University of California Irvine economist David Neumark, argue there is an adverse effect."
The Economist says: "America's minimum wage has long been low by international standards, equalling just 38% of the median wage in 2011, close to the lowest in the OECD. Congress changes it only occasionally, and in the interim inflation eats away its value. The wage was last raised, to $7.25 per hour, in 2009. Since then its real value has slipped back to where it was in 1998."