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Boosting Minimum Wage Shouldn't Hurt Employment

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Thursday, June 25, 2015   

RICHMOND, Va. – Earlier this year, the Virginia General Assembly voted down a proposal to raise the state's minimum wage. Critics argued it would increase unemployment, but new research suggests it won't.

David Cooper, senior economic analyst with the Economic Policy Institute, says it used to be standard thinking among economists that a higher minimum would price some workers out of the job market. He points to recent studies that compared employment data in one location that raised the minimum wage, versus a neighboring community that didn't. Cooper says economists were surprised to find little difference in job numbers.

"Given the research, any effect on employment that would happen from the increases we're seeing right now is going to be very small, whether it's positive or negative," he says.

Cooper says one study examined 600 pairs of counties along state borders, and found a higher minimum wage didn't cause significant, corresponding job losses. He adds they've found with higher wages, employers are seeing lower turnover and higher productivity – more than enough to make up for the cost of the higher pay.

According to Cooper, a sizable number of minimum wage employers are in businesses that see higher consumer demand when low-income families have more money.

"That means there's more customers coming through the door, in the retail sector in particular and in fast food," he says. "Presumably, a lot of those workers go out and shop in retail and buy fast food."

Cooper says the federal minimum wage hasn't been raised in years. In purchasing power, the current minimum would have to go up about $10 to get back to where it was 50 years ago. Since Virginia's low-end wages are not particularly high, Cooper says there should be room to raise the state minimum.

"Low wages in Virginia are sort of middle of the pack," he says. "The twenty-fourth highest in the country. Kind of right in the middle of the pack."

Last January a Senate committee voted, along party lines, to kill a bill that would have raised Virginia's minimum wage to $8 an hour, and then gradually raise it to $10 an hour.



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