FALSEHOOD #27: Biden falsely claimed that there’s no evidence that raising minimum wage negatively affects businesses.
He said, “There is no evidence that when you raise the minimum wage, businesses go out of business. That is simply not true.”
EXPLANATION: This is false. According to research by the NFIB Research Center, conducted in 2019, 1.6 million jobs would be lost if the federal minimum wage was raised to $15 an hour. Over 55% of the job losses would be at small businesses.
A vast amount of research points to negative consequences when the minimum wage is increased. There have been hundreds of studies examining the effect that raising the minimum wage has on employment and poverty levels. An extensive review by Professor David Neumark examined all the studies and concluded that raising the minimum wage negatively impacts employment for young and low-skilled workers. A majority of those who make minimum wage are young. According to Pew Research, 50.4% of minimum wage workers are between the ages of 16 and 24.
Because employment for young and low-skill workers would be negatively impacted, raising the minimum wage would lead to unemployment. According to Steve H. Hanke, Professor of Applied Economics at Johns Hopkins University, “There are seven European Union (E.U.) countries in which no minimum wage is mandated (Austria, Cyprus, Denmark, Finland, Germany, Italy, and Sweden). If we compare the levels of unemployment in these countries with E.U. countries that impose a minimum wage, the results are clear. A minimum wage leads to higher levels of unemployment. In the 21 countries with a minimum wage, the average country has an unemployment rate of 11.8%. Whereas, the average unemployment rate in the seven countries without mandated minimum wages is about one-third lower — at 7.9%.”
SOURCES
Close, B. (2021, February 26). Big Business backs a $15 minimum wage because it will crush Main Street competitors. USA Today. Retrieved December 5, 2022, from https://www.usatoday.com/story/opinion/2021/02/26/big-business-behind-push-for-15-minimum-wage-column/4545386001/
Neumark, D., & Shirley, P. (2021). Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States? https://doi.org/10.3386/w28388
Neumark, D., & Wascher, W. L. (2022, August 9). Minimum wages. MIT Press. Retrieved September 28, 2022, from https://mitpress.mit.edu/9780262515085/minimum-wages/
Neumark, D., & Wascher, W. L. (2010). Minimum wages. MIT Press.
Hanke, S. H. (2014, March 24). Let the Data Speak: The Truth Behind Minimum Wage Laws. Cato.org. Retrieved September 28, 2022, from https://www.cato.org/commentary/let-data-speak-truth-behind-minimum-wage-laws
Morrison, W. (2014). Raise the wage? Federal Reserve Bank of Richmond. Retrieved September 29, 2022, from https://www.richmondfed.org/publications/research/econ_focus/2014/q3/feature3
Publisher. (2021, April 5). How increasing the federal minimum wage could affect employment and family income. Congressional Budget Office. Retrieved September 29, 2022, from https://www.cbo.gov/publication/55681#:~:text=In%20general%2C%20increasing%20the%20federal,their%20family%20income%20would%20fall.
Sherk, J. (2007, January 8). Raising the minimum wage will not reduce poverty. The Heritage Foundation. Retrieved September 29, 2022, from https://www.heritage.org/jobs-and-labor/report/raising-the-minimum-wage-will-not-reduce-poverty
Lammam, C., & MacIntyre, H. (2019, May 17). Minimum wage increases won’t solve poverty: Op-ed. Fraser Institute. Retrieved September 29, 2022, from https://www.fraserinstitute.org/article/minimum-wage-increases-wont-solve-poverty
Wolla, S. A. (n.d.). Would increasing the minimum wage reduce poverty? Econlowdown.com. Retrieved September 29, 2022, from https://www.econlowdown.org/v3/public/would-increasing-the-minimum-wage-reduce-poverty
Boyce, P. (2019, July 5). Why the minimum wage can’t solve the poverty problem | Paul Boyce. Foundation for Economic Education . Retrieved September 29, 2022, from https://www.google.com/amp/s/fee.org/articles/why-the-minimum-wage-can-t-solve-the-poverty-problem/amp
Adams , M. (2013, March 11). Raising the minimum wage hurts the poor . USNews. Retrieved September 29, 2022, from https://www.usnews.com/opinion/blogs/economic-intelligence/2013/03/11/raising-the-minimum-wage-wont-help-the-poor
Cox, J. (2015, December 30). Hiking minimum wage won’t stop poverty: Fed paper. CNBC . Retrieved September 29, 2022, from https://www.google.com/amp/s/www.cnbc.com/amp/2015/12/30/hiking-minimum-wage-wont-stop-poverty-fed-paper.html
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