Failed Stimulus: Minimum Wage Increases and their Failure to Boost Gross Domestic Product
- Joseph Sabia, United States Military Academy at West Point
This study examines whether raising the minimum wage boosts the economy, as many proponents of a higher minimum wage have claimed. The author finds no evidence of a relationship between past minimum wage increases and gross domestic product (GDP)—in fact, he finds evidence that a higher minimum wage causes output to decline in certain industries with a larger concentration of low-wage employees. The study also shows that each ten percent increase in a state’s minimum wage has reduced employment for young adults by over three percent.