As cities such as Los Angeles contemplate their own action, CAP Action analysis shows unemployment often drops after minimum-wage increases.
Washington, D.C. — A majority of cities that increased their minimum wages over a 20-year time period—1993 through 2013—saw their unemployment rates decline one year later, according to an issue brief from the Center for American Progress Action Fund titled “Fight to Raise the Wage Goes Local.” Contrary to the claims of opponents and the business community that raising the minimum wage would hurt jobs, the unemployment rate fell in 60 percent of the 25 instances in which cities raised the minimum wage. At least 20 percent of these increases occurred during the recession. Increasing the minimum wage and providing a living wage for hard work is a key step toward ensuring the economy works for everyone, not just the wealthy few.
“Increasing the minimum wage is one of the most direct actions that policymakers can take to raise wages for low-income workers,” said Anna Chu, Vice President of Policy and Research at the Center for American Progress Action Fund. “While the sample size is still relatively small, cities that raise their minimum wages have seen drops in unemployment more often than not, belying the doomsday claims of those who oppose such increases. Cities have led on the issue of raising the minimum wage, and they are seeing the benefits of workers having more money in their pockets and more economic security.”
“Fight to Raise the Wage Goes Local” looks at 25 minimum-wage increases in Albuquerque, San Francisco, San Jose, Santa Fe, and Washington, D.C., with the first being Washington, D.C. in 1993 and the most recent two years ago, and finds that in 16 cases, unemployment rates went down. Of the nine other cases, six occurred during the recession, and each of the cities have since seen their unemployment rates recover. San Francisco’s unemployment rate is half what it was in 2009, despite three minimum-wage increases since then.
The CAP Action brief cites other research also showing that minimum-wage increases have little impact on employment levels, including data looking at specific industries. Taken together, this research shows that increasing the minimum wage is a viable option for battling income inequality and poverty in a way that does not negatively affect the local economy.
“Raising wages and putting more money in the pockets of hardworking families is an integral step toward ensuring the economy works for all Americans,” Chu said. “We have seen the income gap continue to grow during the recovery, with most of the benefit going to those at the top, even as many Americans are working hard and producing more than ever before. We should be working to ensure all Americans are included in the nation’s prosperity, and a minimum wage that helps people climb out of poverty is a step in the right direction.”
Read the full issue brief here.
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