Press Release
February 10, 2020
The Role of Minimum Wage Increases in Rising Wages
Wages are rising throughout the economy, and some are attributing this growth to minimum wage increases in a number of states. While these minimum-wage hikes have contributed to rising wages for some workers, the data indicate they are not the only factor, argue AAF’s President Douglas Holtz-Eakin and Labor Policy Data Analyst Isabel Soto in a new analysis. Further, minimum-wage hikes have depressed job growth in lower-wage industries, they note.
Their key findings:
- Workers in the 10th percentile of earnings saw an estimated 8 percent wage increase in states that raised the minimum wage, but only a 0.7 percent bump in the 25th percentile, indicating the effect of the minimum wage dissipates for workers higher on the wage scale; and
- The number of jobs in lower-skilled industries grew 0.5 percent more slowly in states that raised the minimum wage than in states that did not, a difference that translates into a cumulative 89,000 fewer jobs in those states.