Wednesday, May 4, 2011

Scapegoating Nevada’s Minimum Wage


By Tsedeye Gebreselassie

In 2006, Nevada voters did a really smart thing. Recognizing that their state’s minimum wage stayed flat year after year, despite rising costs of living, the people of Nevada voted to index their minimum wage rate to adjust annually with the cost of living. In the last few years, these small annual increases have helped thousands of working families make ends meet in a rough economy, while providing a modest boost in precisely the type of consumer spending our nascent recovery needs.

Rather than celebrate voters’ sound economic move, critics of the minimum wage see an opportunity to once again toss out their usual—and widely discredited—claims that a strong minimum wage is a “job-killer.” Counting on understandable anxiety about Nevada’s stubbornly high unemployment rate, opponents of the minimum wage have proposed state legislation that would begin a repeal process for the initiative passed by Nevada’s voters just four years ago.

Let’s quickly dispense with these “job-killing” claims. Real-world experiences with minimum wage increases have produced little evidence of job losses. The decade following the federal minimum wage increase in 1996-97 ushered in one of the strongest periods of job growth in decades. Analyses of states with minimum wages higher than the federal floor between 1997 and 2007 showed that their job growth was actually stronger overall than in states that kept the lower federal level. And just last winter, a rigorous study finding that increasing the minimum wage does not lead to job loss was published in the Review of Economics and Statistics. Economists at the University of Massachusetts, University of North Carolina, and University of California compared employment data among every pair of neighboring U.S. counties that straddle a state border and had differing minimum wage levels at any time between 1990 and 2006. Analyzing employment and earnings data of over 500 counties, they found that minimum wage increases did not cost jobs.

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