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My older son's first job after high school was stocking shelves in a California drugstore, for which he was paid the minimum wage. Heading to work one day during his first week on the job, he was approached by an activist collecting signatures for a petition drive to raise the minimum wage. Caleb listened to the activist's pitch, then politely declined to sign. As he told me later, the irony of the situation didn't escape him. He knew the ostensible goal of the campaign for a higher minimum wage was to boost the take-home pay of workers like him. But he also knew the difference between "ostensible" and "actual."
Minimum-wage hikes are commonly described by progressives (and also, these days, some right-wing populists) as a way to give poor workers a raise, or to guarantee that anyone working full time can afford a basic standard of living. Zohran Mamdani, the socialist Democrat running for mayor of New York, pledges to raise the city's minimum wage to $30 an hour. He calls it "the bare minimum that New Yorkers deserve at this moment."
But sentimental rhetoric about what people "deserve" can't change how the real world works. When the price of something is forced up, demand for that something goes down. Make any good or service more expensive — a dozen eggs, takeout from McDonald's, Pampers diapers, a Disney+ subscription — and people will buy less of it. That applies to labor, too. The more employers have to pay to hire teens to (say) stock shelves, the fewer low-skilled teens will be hired.
That's why every time lawmakers raise the minimum wage, vulnerable workers lose their jobs. The effect has been documented ever since Congress passed the first federal minimum wage law in 1938, triggering the layoff of tens of thousands of mostly Black laborers in the South.
When California last year raised the minimum wage for employees of fast-food chains, the companies immediately responded with layoffs, reduced shift hours, or hiring freezes. By September, according to a working paper published last month by the National Bureau of Economic Research, employment in California's fast food sector had fallen by 18,000.
To be sure, not all fast-food workers who were making minimum-wage ended up on the unemployment rolls. Those who retained their jobs did get an increase in take-home pay. But what moral right do lawmakers have to throw thousands of low-skilled employees out of work so that others can enjoy a raise?
The link between between minimum-wage hikes and lost employment has been repeatedly confirmed. Honest differences of opinion are possible, but most economists agree that a higher minimum wage hurts employment. When the nonpartisan Congressional Budget Office released a major study on the subject in 2021, the Globe's headline summarized the findings: "Minimum wage hike to $15 an hour by 2025 would result in 1.4 million unemployed." Nonetheless, more than 20 states boosted their minimums in 2024; last month Alaska, Oregon, and Washington, D.C., did likewise. Some members of Congress are pressing for a federal increase.
Only rarely do voters or policy makers demonstrate that they grasp how much harm such mandates cause. Last November, Massachusetts voters decisively rejected a ballot initiative to raise the minimum wage for tipped staff. Among those who opposed the measure was Governor Maura Healey, a former restaurant server who understood at a gut level that driving up the cost of hiring wait staff would "run the risk of closing restaurants and putting these workers out of work." In Washington, D.C., officials last week paused a planned hike in the tipped minimum wage after restaurant owners and workers alike warned of layoffs and closures. Even in "blue" strongholds, the threat to low-wage employment can't always be ignored.
Still, it can be hard to fathom just how powerful minimum-wage hikes are at vaporizing jobs. A striking new study illustrates the point. Economists Amrita Nain of the University of Iowa and Yan Wang of McMaster University wondered whether increases in a state's minimum wage prompt companies not merely to replace human workers with automated alternatives — think of the self-serve touchscreens that are now ubiquitous in takeout restaurants — but to actually develop new forms of automation. The answer was unambiguous.
"An increase in the minimum wage leads to more labor-saving innovation," Nain and Wang found. Large minimum-wage increases in a state were unequivocally associated with increased applications for automation-related patents by companies headquartered in that state. Nain and Wang concluded that each compulsory hike in the minimum wage "contributes to poorer employment outcomes for unskilled workers employed in routine tasks."
Minimum-wage laws are always sold as a kindness, but they routinely function as a cruelty, depriving many poor or inexperienced workers of the very jobs they most need. When politicians drive up the lowest wage at which an entry-level worker can be hired, the response from the private sector isn't to suck it up. It's to automate faster than ever.
My son couldn't have explained the economics of all that when he was 18. But he rightly sensed that signing a petition to raise the minimum wage wasn't in his true interest — which is why his best bet was to keep walking.
Jeff Jacoby is a columnist for The Boston Globe, from which this is reprinted with permission.
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