Those concerns were addressed by a state and regional study done in New England. Long story short, over six minimum wage hikes from 1995 through 2012, the increases did not seem to hurt employment in sectors where low-paid workers were concentrated, nor in states with higher minimum wages. The evidence suggests that the beneficial effects override the costs—or, at a minimum, that higher minimum wages do not necessarily destroy jobs.
Verdict: higher wages look like a good thing overall
Based on current macro conditions—with consumer spending growth low despite continuing wage income growth—it doesn't seem that a higher minimum wage would hurt either employment or the economy on a fundamental level. Also supporting the potential positive effects of an increase are the decisions by Walmart, Target, and McDonalds to raise wages across the board for the lowest paid. Early indications are that this move has improved service and business quality.
When all's said and done, rising wages impose costs but appear to be economically beneficial overall. Given the current political environment (with rising pressure for higher minimums) and the economic environment (with rising wage growth), this is a good thing.
Brad McMillan is the chief investment officer at Commonwealth Financial Network, the nation’s largest privately held independent broker/dealer-RIA. He is the primary spokesperson for Commonwealth’s investment divisions. This post originally appeared on The Independent Market Observer, a daily blog authored by McMillan.