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States that Boost the Minimum Wage Have Less Job Loss in a Recession

A new study finds that when states raised the minimum wage in recent recessions, their economies suffered less job loss than those that did not (click on chart at left to expand).

Looking at six New England states, the Massachusetts Budget and Policy Center found that between 1995 and 2011,

New Hampshire, which raised its minimum wage several times during this period…experienced the smallest decline in employment. Rhode Island, the one state that did not increase its minimum wage at all, had the largest decline in employment—5.9 percent, 2.5
percentage points higher than the 3.4 percent drop in New Hampshire.

In addition to New Hampshire and Rhode Island, the other states studied are Connecticut, Maine, Massachusetts and Vermont.

The study further notes that:

although employment has not returned to pre-recession levels in any of these states, growth has been faster…in the three states with the highest minimum wages.

Maybe when people are paid more, they can buy more, so business creates more jobs to fill the demand?

At the national level, 100,000 jobs could be created if the federal minimum wage was raised to $9.80 by July 1, 2014.

Congress is home for summer vacation right now, but lawmakers will be back. And when they return, the AFL-CIO, as well as noted economists, urge them to pass the Fair Minimum Wage Act of 2012 (read letter here).

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