UCI study suggests higher minimum wages ‘destroy jobs’

A new UC Irvine-led study is the latest salvo in a longstanding fight over the minimum wage, reinforcing the researchers’ earlier findings that the wage policy hurts jobs.

The study, published in the IZA Journal of Labor Policy, addresses the current dispute over the validity of certain comparison, or control, groups and the role the groups’ selection played in previous research on the minimum wage.

“What do you use as a comparison or proxy group for states where the minimum wage increased?” David Neumark, a co-author of the paper and a UCI chancellor’s professor of economics, said in an announcement. “It turns out that it doesn’t matter. Higher minimum wages do destroy jobs.”

Neumark co-authored the study with William Wascher, economist with the Board of Governors of the Federal Reserve System in Washington, D.C., and J.M. Ian Salas, research fellow at the Harvard Center for Population & Development Studies.

The trio’s new analysis shows that when gauging the effects of minimum wage hikes with either comparison method — one restricted to proximity or one viewed over a one- to two-year span — the evidence points to net job losses over one to two years.

This latest study comes as California will see its minimum wage rise to $10 an hour by 2016.

Previously, some researchers have argued that only adjacent states or counties should be used as comparisons. When the parameters were narrowed in this way to adjust for what would have happened had the minimum wage not gone up, employment showed no net drop, researchers have asserted.

Neumark said selecting comparison groups is an ongoing challenge in evaluating the minimum wage because researchers cannot observe the same economy with and without the policy.

The researchers’ findings are consistent with their previously published work, summarized in the 2008 book “Minimum Wages.”