Center for Business and Economic Research - Ball State University

Did the Increase in Minimum Wage Cause Our Unemployment Rate to Rise?

Did the Increase in Minimum Wage Cause Our Unemployment Rate to Rise?

This report estimates the impact of the July 2008 minimum wage increase on unemployment rates in the United States. The July minimum wage increase affected only 26 states, with increases between 5 cents and 70 cents per hour. The remaining 24 states had minimum wage laws above the 2008 Federal level. Our analysis concludes that a 10 percent increase in the minimum wage would result in a roughly 0.19 percent increase in unemployment. Applied to the U.S. labor market in July, this results in a one-time decrease in employment of approximately 160,000 workers.

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Tags: recession, unemployment and Skills Gap, minimum wage

Author: Michael J. Hicks