What Happened When 18 States Raised Their Minimum Wage?

The biggest argument against raising the minimum wage is that it’s going to end up cutting jobs. By having to pay each worker extra, the cost of producing goods or services will increase. So, the argument goes, employers will either pass that cost off to customers (by raising prices) or try to find savings elsewhere (by investing in equipment rather than workers, or reducing the hours their employees work). Either way, the total demand for labor will drop.

But this explanation is based on a pretty simplistic, static conception of the labor force. And other economic models have offered alternate conclusions. “The ultimate test,” of whether it helps or hurts, however, “is not theoretical conjecture, but evidence,” writes David Neumark of the San Francisco Federal Reserve. And the folks over at the The Center for Economic and Policy Research have provided just that.