The Minimum Wage and Small Businesses

When it comes to a minimum wage increase, pro-business (anti-family) conservatives like to trot out phrases like "simple supply and demand." "The price of labor goes up," they say, "and a business has to buy less of it, and the wage increase ends up actually hurting the poor." It sounds reasonable, but it isn't true.

Below I'll lay out four facts that will come in handy as you talk about the minimum wage increase proposals that are now before the NC General Assembly. Not all conservatives are allergic to facts, and it's possible that you can inject a tone of common sense into the discussion.

Fact: increasing the minimum wage does not reduce employment.

A potential side effect of increasing the minimum wage is a reduction in employment: with low-wage labor more expensive, some firms may hire fewer workers. Many studies have examined this issue, and the weight of the evidence suggests that modest increases in the minimum wage have had very little or no effect on employment. In fact, a recent study of the 1996 and 1997 increases, using several different methods, found that the employment effects were statistically insignificant.

The 1999 Economic Report of the President (PDF), pages 111-12.

Fact: a higher minimum wage may actually increase employment.

From the entire period from January 1998 to January 2004, aggregate employment in the minimum wage states (plus D.C.) increased by 6.15 percent. This is 50 percent greater than the combined job growth of 4.11% for the other 39 states.>

State Minimum Wages and Employment in Small Businesses, Fiscal Policy Institute (PDF) page 8.

Fact: small businesses (fewer than 50 employees) grow faster in states with higher minimum wages. The chart below comes from the Fiscal Policy Institute report.

Fact: Raising the minimum wage would benefit millions of working families, not just high school kids.

A substantial portion (38%) of low-wage workers in March 2003 lived in families with incomes below 200% of the poverty line in 2002—an income range (less than $29,000 for a family of three in 2002) in which people are often unable to afford basic necessities.

For those above 200% of the poverty line, the earnings of low-wage workers are essential to their families' incomes and therefore their standard of living. In fact, 1.4 million families with incomes hovering above 200% of poverty would drop below that line if it weren't for the earnings of those families' low-wage workers. For such families, though not impoverished now, the minimum wage is important for keeping them in the middle class.

Economic Policy Institute: The Who and Why of the Minimum Wage.


Very excellent and much appreciated, Lance.

This is a great resource and I'm very glad to have it available. I bet the Kos community would benefit from access to this tight summary.

I've stopped doing much of that myself.

because I usually don't have much of interest to say about the national scene. But this content is really excellent and thank you for taking a few minutes to put it out there for the world to see. We never know what difference we're making, so we might as well swing for the fence.

Or something like that.

You're the best.

Lance You NEED to

get over to Kos and join the conversation on your post. You also need to post a "tip jar" so people can recommend you. This is an excellent post and you are some people joining the conversation. I didn't know if you had noticed.

Vote Democratic! The ass you save may be your own.

I hadn't, thanks

I'm not sure what you mean by a tip jar; I'll see if I can figure it out.

Just write

Some one told me to put up a tip jar. Does this work?



it's your first comment. You'll see regulars like teacherken always put a comment immediately under their diary. This is how you get "trusted user status". TUS is really a load of C R A P...LOL...but there are some people who really think it's HUGE. I have never hidden comments, but I have troll rated a few - not many, but some that use very foul language. I don't usually get much into the trusted user mess. I think you have to have 350 recs or something.

Vote Democratic! The ass you save may be your own.

I have to admit

that I was so impressed when I finaly got TUS. Now of course, it's no big deal. I haven't even posted a comment in days. I've been too busy working on my own blog (along with tons of homework!)

Smiling; nodding.

“Of all the varieties of virtues, liberalism is the most beloved.” —Aristotle

this is off topic

Great article and all that. Really. I mean it. And minimum wage is an awesome wedge issue -- according to that great '05 Pew Report on voter typologies which I won't link to here because, more importantly:

How did you format your signature/slogan?

All the world's a stage,
And all the men and women merely players.
So enjoy the Drama.

A lik'a so:

<br />&nbsp;<br /><span style="font-size: x-small; color: #aaa;"><em>&#8220;Of all the varieties of virtues, liberalism is the most beloved.&#8221;</em> —Aristotle</span>

The &#8220; and &#8221; make curly quotes. &nbsp; is a non-breaking space (just a hard space, in this case sandwiched between two line breaks to force some space between the sig and the post content).

There were some really good comments

on your diary. I don't post often b/c of the time it takes to monitor comments when I get them. It is a great way to spread the word we are out here, though. You didn't get any negative ridicule (which I see a lot...someone always has to be a smartass).. I know you don't have time to be a DKos regular, but this is an excellent example of a post that might do well there. It does all depend what you are up against too.

Vote Democratic! The ass you save may be your own.

Thanks for the push.

I may try to post more often there.