When the minimum wage is increased, it puts more money into consumers pockets to spend. When they spend, that creates higher demand for the goods and services.
Put simply, a dollar spent in the market place gets respent by the very people who earn income, and that gets multiplied by factors.
Originally published March 12, 2014 at 9:52 PM | Page modified March 13, 2014 at 7:47 PM
Studies look at what happened when cities raised minimum wage
Raising the minimum wage doesn’t have a drastic, negative impact on employment, according to university researchers who have studied pay hikes in other cities.
By Lynn Thompson
Seattle Times staff reporter
Ten years ago, San Francisco raised its minimum wage from $6.75 to $8.50 an hour, a 26 percent increase. Since then, it has gone up at regular intervals to its current $10.74 an hour, the highest big-city starting wage in the country.
The city has slapped other mandates on businesses, including paid sick leave and a requirement to provide health-care coverage or pay into a pool for uninsured residents.
What have the effects been on employment?
Almost none, according to economists at the University of California, Berkeley, who have studied San Francisco, eight other cities that raised their minimum wages in the past decade, and 21 states with higher base pay than the federal minimum.
Businesses absorbed the costs through lower turnover, small price increases at restaurants, which have a high concentration of low-wage workers, and higher worker productivity, the researchers found.
The average increase among cities raising the minimum wage was 40 percent. The average step increase for a phased-in pay hike was 17 percent.
“Our data show that an increase up to $13 an hour has no measurable effect on employment,” said Michael Reich, a Berkeley economics professor with the Institute for Research on Labor and Employment.
I'm also happy to report that our city, Sunnyvale, CA, approved raising the minimum wage to $10.30/hour. San Francisco has a graduated increase to $15/hour, and they're the highest minimum wage in the country.