"Study Suggests Wage Hike in Alabama Will Hurt Employment" Junk Science & Lazy Reporting

Study (*) Suggests Wage Hike in Alabama Will Hurt Employment

With another increase in the federal minimum wage rate set for this week, the Washington-based Employment Policies Institute (EPI) released new preliminary data showing the relationship between minimum wage increases and unemployment.

The federal minimum wage rate will go up by 70 cents Thursday, raising it from $5.85 to $6.55 per hour. The minimum wage was last raised July 2007.

The study, which is being published this fall and is authored by professors Joseph Sabia (University of Georgia) and Richard Burkhauser (Cornell University), analyzed the effects of the 2005-06 increase in New York State’s minimum wage and found that the employment decline among vulnerable groups like teenagers and adults without a high school diploma was substantial.

The study found that for every 10% increase in the minimum wage, employment among 16-29 year olds without a high school degree decreased between 6 and 14 percent.

This study buttresses other recent research papers, according to EPI.

A study from the University of California at Irvine found that for every 10 percent increase in the minimum wage, employment for high school dropouts and young black adults and teenagers falls by 8.5 percent.

Research from Duke University found that minimum wage increases cause low-skilled employees to lose their jobs to more skilled applicants—often second and third earners from wealthier families who wouldn’t have taken a job paying the previous wage.

According to EPI, the job loss is a result of the burden government places on small businesses by consistently increasing labor costs with auto-pilot wage hikes regardless of economic conditions.

For a business with 20 entry-level employees, Thursday’s $0.70 wage hike will increase labor costs by approximately $30,000 in the next year, according to EPI.
Businesses with small profit margins would need to sell hundreds of thousands of dollars in additional goods or services to recoup those increased costs, a virtual impossibility in this stagnant economy.

“Decades of economic research clearly demonstrate that minimum wage hikes result in job loss for the most vulnerable members of the economy,” said Rick Berman, executive director of EPI. “The unintended consequences of Thursday’s hike is pricing low-skilled working men and women in Alabama out of the job market and increasing unemployment among those groups that need help the most.”

--posted by Markeshia Ricks

****

* That study was produced by a FRONT GROUP!

Get a grip Montgomery Advertiser.