Do Higher Minimum Wages Create More Jobs?: President Obama points to evidence that they do, but he must have missed New York, New Jersey and Connecticut

Click here to read the WSJ article. By Liya Palagashvili and Rachel Mace. Ms. Palagashvili is a fellow of the Classical Liberal Institute at the NYU School of Law. Ms. Mace studies economics at George Mason University. Excerpts: 

"Why would firms hire more workers when government raises the cost of hiring workers? The progressive answer is that hiking the minimum wage raises the incomes of poor workers, causing them to spend more. This additional spending, in turn, is so great that firms hire even more workers."

"This theory is dubious for many reasons, not least because minimum-wage workers make up about 2% of the workforce, a percentage much too small to have such an effect."

"Not so. Of the 13 states that raised the minimum wage, Connecticut, New Jersey and New York were the three that raised it most, with increases ranging from 5% to 14%. These three states also experienced the worst job growth between January and May, an average of 0.03% compared with an average 1.28% for the other 10 states. Indeed, job growth was worse in each of these three states than it was, on average, in the 37 states that did not raise their minimum wage at all. Moreover, in New Jersey, the state that hiked minimum wage the most—to $8.25 an hour from $7.25—employment actually fell by about 0.56%."

"Washington experienced the largest job growth at 2.1%, but the state only raised its hourly minimum wage by 13 cents."

"We conducted a statistical analysis of the Bureau of Labor Statistics' data called a two-sample "t" test for comparing two means. We found, for this time period, no difference in the job-growth trend in the states that raised their minimum wages from states that did not. In other words, the correlation cited as debunking the economic case against the minimum wage is not statistically significant."

"When looking—over the time-span December 2013 through June 2014—at only the 13 states that raised their minimum wage in January, those that raised it the most had, on average, lower job growth than did those that raised it the least."