Is a higher minimum wage a job killer? Not in these states

One of the most hotly contested issues in the debate over raising the federal minimum wage -- whether it will prove to be a job killer -- may already be answered.

Thirteen states kicked off 2014 by boosting their own baseline pay, through measures including an overall jump in what employers must shell out and inflation-tied increases.

With two months of employment data now available, there's evidence that a higher baseline wage doesn't lead to job losses. Most of the states that raised their minimum wages actually posted gains in their employment levels, according to an analysis from the Center for Economic and Policy Research. Their findings? The 13 states with higher baseline wages saw a 0.28 percent average increase in employment, compared with "essentially zero" for those that kept their wages unchanged.

"Not only do we fail to find any evidence that minimum wage increases hurt state employment, we actually find the opposite. This exercise is far from definitive, but there is no obvious sign that a higher minimum wage is a 'job killer,'" wrote director of domestic policy Nicole Woo and domestic program intern Jeffrey Gianattasio.

The states that both boosted their minimum wages and posted better employment numbers are: Rhode Island, Colorado, Montana, Vermont, Arizona, Oregon, Florida, Washington, Ohio and New York. Three states with higher baseline wages -- West Virginia, New Jersey and Connecticut -- saw either no change or a slight dip.

To be sure, the analysis is based on only two months of data, but the results should provide some ammunition to supporters of a higher federal baseline wage.

While President Obama and congressional Democrats are in support of a $10.10 baseline wage, the notion is facing opposition from some corporate interests -- such as the National Restaurant Association -- and conservatives.

Not everyone in the corporate world is fighting a higher minimum wage. Some well-known executives, such as Costco (COST) president Craig Jelinek and Ben & Jerry's founders Ben Cohen and Jerry Greenfield, have come out in favor of the measure.

One point to consider: the minimum wage only impacts a small segment of the workforce. Only 3 percent of hourly and salaried workers now rely on minimum-wage earnings, a decline of two-thirds since 1979, according to a report from Goldman Sachs economists last month.

But boosting the baseline wage would likely have a "ripple" effect on the economy, as employers will then set their wages slightly higher than the new minimum, the Goldman report notes. While it's not clear how long that effect plays out, it's possible that the states that just boosted their baseline wages might see an impact later in the year.

Nevertheless, economic studies "have generally found either no significant effect or a small negative effect on employment" after an increase in the minimum wage, Goldman noted.

That's sure to be good news to employees pulling in the current baseline wage of $7.25. After all, that translates into annual income of just $15,080, or well below the poverty threshold of $22,282 for a family of four.

  • Aimee Picchi

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