According to Rand Paul, “virtually all the studies show that if you increase the minimum wage, you get higher unemployment”.
According to a local, if you increase the minimum wage, a Big Mac will cost $20.
However, a letter sent to President Obama and congress by the Economic Policy Institute (EPI) and signed by 600 economists urged them to pass the Harkin-Miller minimum wage bill. The 600 signers included seven Nobel laureates and eight former presidents of the American Economic Association.
In the letter they noted that past hikes in the minimum wage have had “little or no negative effect on the employment of minimum-wage workers” and could modestly add jobs “as low-wage workers spend their additional earnings, raising demand and job growth”.
Even the rather conservative Federal Reserve Bank of Chicago claimed that raising the federal minimum to $9, as President Obama had proposed in his 2013 State of the Union, would increase household spending by $28 billion which could increase the United States GDP by up to 0.3 percentage points and lead to more job growth.
According to the EPI president, “Across the phase-in period, GDP would grow by about $22 billion, resulting in the creation of roughly 85,000 net new jobs” and would directly affect 17 million workers and indirectly affect another 11 million.
David Cooper, another EPI economist wrote, “Economists generally agree that low-wage workers are more likely than any other income group to spend any additional earnings they receive largely because they must in order to meet their basic needs”. But, when it came to higher-income individuals and corporations they “are more likely to save at least a portion of any additional income”.
He went on to say, “raising the minimum wage can provide a modest boost to overall economic activity”.
A $10.10 minimum wage would mean a raise for 16.7 million workers who would then have more money in their pockets to spend on goods and services. This could help boost the economy. The gradual increase to $10.10 by 2016 would increase wages by $35 billion, boosting the GDP by about $22 billion.
A recent study by the Center for Economic and Policy Research shows that over the past few decades, minimum wage hikes have not caused employers to lay off workers because of factors like retaining staff which reduces the need for training and learning time, and any increase in prices will be reasonable because businesses need to stay competitive.
John Schmitt of the Center for Economic and Policy Research argues that a higher wage may lead employers to push employees to work harder, which can be preferable to cutting hours or workers.
To back this up, fast food restaurants in Georgia and Alabama said they would respond to a minimum wage increase with higher performance standards.
A higher minimum wage could also make it easier to recruit and retain workers, which can improve the bottom line since replacing someone can cost as much as 20 percent of a salary when training a new hire.
Since it is not true that minimum wage workers are mostly teens, the people who would benefit most from a minimum wage increase are actually adults (87.5%) with more than half being women who work over twenty hours a week to make their households' ends meet.
When comparing states that established their own minimum wage bills with those that did not, it has been found that there was no evidence to show that the rise had reduced the number of jobs in the minimum wage states.
Increasing the minimum wage will also not result in $20 Big Macs.
Oh, a minimum wage increase could be used as the excuse for attempting to bilk the consumer and blaming it on employees, but it would also be the impetus for people to buy a hamburger elsewhere, or start a business that would not charge as much while still turning a profit.
The Congressional Budget Office’s recently released report found that a $10.10 minimum would mean higher earnings for 16.5 million workers, resulting in $31 billion more in higher earnings, and could raise nearly 1 million people out of poverty.
However, the report also found that the increase could reduce jobs slightly, “Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent” which would be because of a decrease in jobs for low-wage workers as well as an increase of “a few tens of thousands of jobs” for others due to higher demand.
The job losses would most likely result from employers increasing prices to deal with the higher wage, which would lower demand and therefore their need for more workers. Some employers might even substitute technology for workers due to the higher cost of wages.
This, of course could be reduced if CEO wages and bonuses were made more reasonable.
The report also says, “Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion”, and that would positively impact over 95 percent of those affected.
It was also found that minimum wage increases don’t hurt jobs. Minimum wage increases analyzed at the state level over two decades “found no clear evidence that the minimum-wage increases affect aggregate job creation when unemployment rates are high".
During times of 7% unemployment or more, the rate actually declined 52% of the time and in a few cases remained unchanged.
There have been five additional studies and reports that have found that minimum wage increases have had “no discernable effect on employment levels”, according to the report.
Apparently either Rand Paul has made things up, assumes what he wants to believe is true, or has not looked at too many reports.
Perhaps he may need to define his term "virtually".