According to history, raising the minimum wage doesn’t lead to job losses

President Biden has proposed raising the federal minimum wage, from $7.25 to $15.00 an hour by 2024. Predictably, Republicans say this will lead to massive job losses. Republicans say raising the minimum wage increases labor costs for businesses that employ minimum wage workers, and this will lead those employers to lay people off. It sort of makes sense. But is it true? Numerous studies suggest not, but Republicans disdain experts and academic eggheads and dismiss studies. Is there another way to test this theory? Yup: history.

The minimum wage was first established in 1938, during the depths of the Great Depression. Since then, it’s been changed 28 times: raised 26, and actually lowered twice. Unfortunately, economic data before 1950 isn’t particularly reliable, but since 1950 the rate has been raised 24 times and lowered twice. What does the history of the last 70 years tell us?

If raising the minimum wage leads to job losses, the unemployment rate should go up. Conservatives act like it’s an iron rule: raise the minimum wage – drive down employment. But history tells otherwise.

In the 24 times the minimum wage was raised since 1950, unemployment went down 10 times in the month after the wage was raised, and up 8 times. It remained unchanged 6 times. So employment actually increased more often after the minimum wage was raised than it decreased.

In 1950, the minimum wage was raised from 40 cents to 75 cents an hour, nearly doubling it. Imagine the job loss and devastation to the economy this must have caused. Well … actually the unemployment rate went down, from 6.5 percent to 6.4 percent the next month and 5.8 percent two months later. And here’s the really crazy thing, the GDP went from 3.7% to 7.3%, almost doubling. The minimum wage was almost doubled, employment increased, and the overall national production rate almost doubled.

Some will argue that one month isn’t statistically valid, so let’s look at three months. In the three months after the wage was raised, unemployment went down 9 times, and up seven times. It was variable, steady or up and down, eight times. So, statistically, employment actually increased more often than not after the minimum wage was raised. So much for the Republicans’ Iron Rule.

Another common Republican argument is that raising wages will force companies to raise the price of their goods and services to cover increased labor costs, and this will cause inflation. Does it? Nope. In the 24 times the minimum wage was raised, inflation went down 12 times and up 10 times. So statistically, raising the minimum wage is more likely to correspond to a lowering inflation rate than a rising rate. So much for that argument.

Finally, when you look at Gross Domestic Product (GDP) you seen an increase more often than a decrease. Of the twenty-four times the wage has been raised since 1950, GDP has gone up 14 times and down 10 times. And some of those increases in GDP, like in 1950, were dramatic. So statistically it would appear that raising the minimum wage has a net positive impact on the overall economy.

Perhaps the most frustrating thing about the debate over raising the minimum wage is that we’re having a debate at all. There’s nothing to debate. Raising the minimum wage does not drive up unemployment. These statistics, and numerous studies, disprove it. The fact that this essay – which contains nothing but historical statistical data – is published on the opinion page, is troubling. It’s not my opinion, it’s easily provable historical fact. But since you can’t find these facts in the paper, feel free to send me an e-mail (mike@coblenzlaw.com) and I’ll send you the charts that show that raising the minimum wage doesn’t increase unemployment, doesn’t drive up inflation, and doesn’t harm GDP.

Michael Coblenz is a patent attorney in Lexington. He can be reached at mike@coblenzlaw.com.