Center for American Progress Action

RELEASE: Raising the Minimum Wage Helps, Not Hurts, the Economy
Press Release

RELEASE: Raising the Minimum Wage Helps, Not Hurts, the Economy

Read the analysis.

Washington, D.C. — As the Senate prepares to vote on raising the federal minimum wage in the coming weeks, a new analysis released today by the Center for American Progress Action Fund details how a minimum-wage increase would boost the economy and debunks critics’ claims of so-called harmful side effects.

The pending Senate bill would raise the federal minimum wage from $7.25 an hour to $10.10, and although opponents claim that raising the wage increases unemployment because businesses cannot afford to keep all of their employees, this is simply untrue. Even during periods of high or stagnant unemployment, job losses are not more likely to occur if the minimum wage is increased. In fact, increasing an employee’s income has many positive effects, including decreasing employment turnover and reducing the taxpayer burden from low-wage workers.

“Raising the minimum wage is a no-brainer because it is not only good for workers but would also boost demand and help the economy,” said David Madland, Director of the American Worker Project at the Center for American Progress Action Fund and co-author of the piece. “Our research clearly shows that opponents’ claims are overblown—unemployment has actually fallen after the majority of minimum-wage increases during hard economic times.”

According to the CAPAF analysis of more than two decades of minimum-wage increases during periods of high unemployment, raising the minimum wage does not have the harmful effects that critics claim:

  • Unemployment declined 52 percent of the time when the minimum wage was increased.
  • States like Alabama and Tennessee saw their unemployment rate drop following minimum-wage increases during high unemployment by 1.6 percent and 1.4 percent, respectively—a rate much faster than the national average of 0.1 percent.
  • Low-wage workers have very little economic power, particularly during periods of high unemployment.
  • A significant body of academic research finds that raising the minimum wage does not result in job losses, even during periods when the unemployment rate is high.

Raising the federal minimum wage would provide the kind of boost in consumer demand that our economy sorely needs. As policymakers prepare to vote, they should feel confident that raising the minimum wage would not hurt employment and will provide a much-needed economic boost.

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To speak to an expert, contact Katie Peters at [email protected] or 202.741.6285.