Raising the minimum wage always kills jobs

What we know

Classical economic theory predicts that raising the minimum wage above the market clearing wage should reduce employment, since employers demand less labor at a higher price. This prediction shaped decades of policy debate, but empirical labor economics has increasingly complicated this simple picture. The most influential modern research comes from David Card and Alan Krueger, who studied the 1992 minimum wage increase in New Jersey by comparing fast food employment there with neighboring Pennsylvania, which did not raise its minimum wage. Their 1994 study found no evidence of reduced employment in New Jersey relative to Pennsylvania, a result that challenged the standard model and reshaped subsequent research design in the field.

Since then, a large body of "border discontinuity" studies, comparing adjacent counties across state lines with different minimum wages, most notably work by Arindrajit Dube, T. William Lester, and Michael Reich published in 2010, has similarly found minimal employment effects from moderate minimum wage increases. A comprehensive 2019 Congressional Budget Office analysis of a proposed federal increase to 15 dollars per hour projected a range of outcomes, including some job losses (estimated around 1.3 million in the CBO's median scenario) alongside significant wage gains for tens of millions of workers and reduced poverty, illustrating that even mainstream nonpartisan analysis finds a mixed, not uniformly negative, picture rather than a simple net destruction of jobs.

Economists broadly agree the size of the increase and local economic conditions matter considerably. Very large or rapid increases, or increases in low-wage regions where the new minimum approaches or exceeds the local median wage, are more likely to show measurable employment effects than modest increases in higher-wage regions. Seattle's phased minimum wage increase to 15 dollars, studied extensively by University of Washington researchers, produced mixed findings across different papers: one analysis found reduced hours for low-wage workers, while a later, more comprehensive study using better data found more modest effects concentrated among certain groups, illustrating how sensitive results are to research design and the type of business examined.

The claim "minimum wage kills jobs" is best treated as mixed rather than false or supported outright, because the underlying research does not converge on either "minimum wage increases have no employment costs" or "minimum wage increases substantially reduce jobs" as a universal rule. What the evidence more consistently supports is that moderate increases in relatively low-wage-to-median-wage contexts tend to have small, sometimes statistically undetectable employment effects, while very large increases carry greater risk of measurable job losses in some sectors, particularly for lower-skilled and younger workers, a nuance frequently lost when the claim is stated as an absolute. Economists surveyed by the University of Chicago's IGM Forum in 2015 showed a similarly divided picture: a plurality agreed a federal minimum wage increase to 15 dollars would reduce employment for low-wage workers to some degree, while many others were uncertain or disagreed, reflecting the genuine, unresolved empirical disagreement within the economics profession itself rather than a one-sided consensus in either direction.

Common claims

• Any minimum wage increase will always destroy jobsOversimplification. Empirical evidence shows employment effects are small at moderate increases; large increases show more consistent effects.
• Minimum wage increases only help workers with no economic downsidesOversimplification. CBO projects modest job losses alongside significant poverty reduction and wage gains.
• CBO analysis shows minimum wage increases are bad policyIncomplete. CBO presents the tradeoff: modestly fewer jobs but substantially reduced poverty, without taking a policy position.

Evidence hierarchy

All sources

• Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and PennsylvaniaDavid Card and Alan Krueger, American Economic Review · 1994
• The Effects on Employment and Family Income of Increasing the Federal Minimum WageCongressional Budget Office · 2019
• Minimum wage research summariesUniversity of Washington, Seattle Minimum Wage Study · 2019
• Minimum Wage Effects Across State BordersArindrajit Dube, T. William Lester, and Michael Reich, Review of Economics and Statistics · 2010

Related terms