Raising minimum wage will lead to more job loss

The New York Assembly may have voted in favor of a minimum wage hike to $9, but that doesn’t mean the State Senate has to similarly vote to harm the employment prospects of thousands of the Empire State’s citizens.

The effects of such a hike aren’t hard to predict. Businesses that hire entry-level employees and pay them minimum wage – restaurants or grocery stores, for example – keep 2 to 3 cents in profit from each sales dollar and can’t just absorb the increase. Raising prices on cost-conscious customers typically isn’t an option, either, because sales fall as a result. Businesses are instead forced to provide the same service at a lower cost – that means more self-service and fewer job opportunities for the same people the Legislature wants to help.

The evidence backs up the intuition: 85 percent of the most credible economic research on the minimum wage from the last two decades points to job loss following a wage hike.

Michael Saltsman

Research Director

Employment Policies Institute