by Joseph Sabia
Employment Policies Institute
April 24, 2014
President Obama as well as Congressmen Harkin and Miller have agreed on an increase in the federal minimum wage to $10.10. In this new study, Dr. Joseph Sabia of San Diego State University analyzes Census Bureau data to measure the impact of a higher minimum wage in periods of strong and weak economic growth. Sabia finds that, over the past two decades, each ten percent increase in the minimum wage has reduced employed for less-educated young adults by as much as 2.3 percent. However, this top-line result masks important variation in the effects of the minimum wage that depends on the economy. His finding that the effects of a higher minimum wage are exacerbated in a weak economy suggests that the drawbacks of setting the minimum wage to rise automatically—regardless of the state of the economy—should be considered carefully by policymakers on the local, state, and federal level.

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