In the past, conservatives and libertarians used to be able to argue against the minimum wage by stretching its logic to an extreme. “If $7.25 is so great, why not $20 an hour, or $50 an hour” we could rhetorically ask. Unfortunately for us, the absurd has become reality. Seattle, San Francisco and New York are currently in the process of implementing $15 an hour minimum wages, and the cause is championed by politicians such as Bernie Sanders. Elizabeth Warren even goes as far as supporting a nearly $22 an hour minimum wage.
As much as supporters would like to deny it, there’s no question that such policies will cost jobs, the only real question is how many. The fact that such an absurdly high minimum wage is becoming reality has sparked a great deal of research, and for minimum wage advocates, the results aren’t pretty.
The nonpartisan Congressional Budget Office projects 3.3 million job losses from a hike to $15 an hour. That may seem like a lot – but it’s nothing in comparison to what other studies have found. Research from economists at the Massachusetts Institute of Technology and National Bureau of Economic Research project 6.6 million lost jobs, and researchers at the Manhattan Institute estimate that as many as 16.8 million jobs would be lost.
It’s worth putting into perspective what kind of effect this would have on the economy. Let’s just take an average of the three estimates – 8.9 million job losses – and look at what would happen to the unemployment rate. Subtracting 8.9 million jobs from the American labor force as of June 2015 would decrease the number of employed workers to 137.3 million out of a labor force of 155.7 million. In other words, with a $15 minimum wage, we could expect to see the national unemployment rate rise to 11.82%. This is a rate higher than we saw in the depths of the recent financial crisis. Does anyone really think that would be worth tolerating so that some teenagers flipping burgers can make a few extra bucks?
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