More Evidence that the Minimum Wage Hurts the Young and the Poor

Empirical research continues to show that the minimum wage, when it is set above the prevailing wages actually paid to entry level workers in a particular locale, throws many of the most vulnerable out of work. The latest, from Jeffrey Clemens of the University of California, San Diego, is titled “The Minimum Wage and the Great Recession: Evidence from the Current Population Survey.” It is a working paper of the National Bureau of Economic Research. The abstract states:

I analyze recent federal minimum wage increases using the Current Population Survey. The relevant minimum wage increases were differentially binding across states, generating natural comparison groups. I first estimate a standard difference-in-differences model on samples restricted to relatively low-skilled individuals, as described by their ages and education levels. I also employ a triple-difference framework that utilizes continuous variation in the minimum wage’s bite across skill groups. In both frameworks, estimates are robust to adopting a range of alternative strategies, including matching on the size of states’ housing declines, to account for variation in the Great Recession’s severity across states. My baseline estimate is that this period’s full set of minimum wage increases reduced employment among individuals ages 16 to 30 with less than a high school education by 5.6 percentage points. This estimate accounts for 43 percent of the sustained, 13 percentage point decline in this skill group’s employment rate and a 0.49 percentage point decline in employment across the full population ages 16 to 64.

Emphasis added. Via Greg Mankiw.

There was a time when the propensity of the minimum wage to increase unemployment was considered a matter of common sense, and newspapers like the New York Times and the Washington Post editorialized in favor of abolishing the minimum wage altogether. Now, however, it is all demagoguery all the time on the Left, and the minimum wage has become a popular, if wholly misguided, rallying cry.

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