with current debates over raising the minimum wage, the experts are weighing in on whether or not there is an impact on unemployment. the following graphs present relevant data from 1960.
the minimum wage data comes from infoplease, as does the unemployment data. the gdp data is from usgovernmentspending.
these statistics are in nominal values, since that is perhaps relevant to the psychological impact of minimum wage wages. below, inflation adjusted values are presented.
actually, gdp doesn’t seem to tell us much since it basically just goes up, but i left it in for comparison anyways.
on the other hand, there does appear to be a face value correlation between minimum wage hikes and unemployment surges. for instance, in 1967, the minimum wage was raised to $1.40, and then the following year to $1.60. From ’66 to ’68, unemployment dropped from 3.8% to 3.6%, but by 1970, it had jumped to 4.9. From ’74 to ’81, the minimum wage was further raised from $2 to $3.35 and unemployment continued to rise to 7.7 in ’76 and even 9.7 in ’82. in ’91, the wage was raised to $4.25 and unemployment jumped from 5.6% to 6.8 and then even 7.5 in ’92. In fact, from 2006 to 2009, the wage was hiked from $5.15 to $7.25, while unemployment skyrocketed from 4.6% to 9.3. i’m actually a bit surprised i’ve never heard anyone blame the minimum wage raises for the great recession.
on the other hand, there were raises in ’61 (from $1 to $1.15) and ’63 (to $1.25) while unemployment actually dropped from 5.5% to 3.6 (in ’68), and ’96 and ’97 (from $4.25 to $4.75 to $5.15) while unemployment dropped from 5.6% (in ’95) to 4% (in 2000).
that kind of seems like around 4 examples of negative effects compared to 2 contrary examples.
but all that said, there is NO long-term effect on unemployment since the wage keeps going up, but unemployment returns to its rough mean. so though the critics of minimum wage raises may have a short-term point, i will continue to assume that in the long-term, it helps people who are just barely scraping by, scrape a little less roughly.
of course, as the chart below shows, in real purchasing power, the minimum wage has actually been falling since 1968, which one could possibly try to attribute some employment increases to (maybe in the ’80s?). of course, what good is employment if it doesn’t provide a livable wage?
regarding real per capita gdp, one can see plateaus in growth around 1970, 1975, 1980, 1990, 2000, and pre-2010. one might even be tempted to blame some of these on the minimum wage increases, but again, nothing has really stopped the inexorable growth of this gdp.
the minimum wage data again comes from infoplease. the gdp data comes from the st. louis fed.
crazy crowds 