High Minimum Wage Boosts Economy
As Labor Day approaches think about this:
Does raising the minimum wage kill jobs?
Doesn’t look like it.
In 2014 these states raised the minimum wage: AZ, CA, CT, FL, MO, MT, NJ, NY, OH, OR, RI, VT, and WA.
Compared with the rest of America, these states also had more robust economies, higher employment, and higher wages for low income workers.
Check out this graph:
When San Jose raised the minimum wage the unemployment rate fell to 5.4% from 7.4% and the number of restaurants rose. San Jose’s economy also fared better than surrounding communities.
Nobel prize winning economist, Paul Krugman says,
Every time a state raises its minimum wage while neighboring states don’t, it, in effect, performs a controlled experiment. And the overwhelming conclusion from all that evidence is that the effect you might expect to see — higher minimum wages leading to fewer jobs — is weak to nonexistent. Raising the minimum wage makes jobs better; it doesn’t seem to make them scarcer.
Here’s why economies get better:
When the poor make more money, they spend more money. So businesses must hire. These new employees spend more. More hiring… and the economy spirals upward.
Yet business groups — and the conservative legislators they fund via campaign contributions (aka legalized bribery) — insist that rising wages will raise unemployment and recklessly jolt the economy.
Oh, and high pay makes workers lazy.
But don’t BIG BOSSES also say that they need high earnings to motivate their own work — so they require generous incomes and big tax breaks?
Who has more power to deliver this contradictory message? Why employers, of course.
The message is good for employer pocketbooks since the incomes of the richest Americans skyrocket when wages are kept low and when unions are busted.
A lower minimum wage nicely lines the pocketbooks of rich business owners and managers. But the overall economy improves with a higher wage.
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