The Curse of Econ 101
That&#x27;s a lot of words intended to obscure a very simple subject.<p>1. Theoretically, a minimum wage will reduce unemployment, and the higher the minimum wage, the higher the impact.  However, even in theory it has to be quite high to get meaningful impacts, given how noisy employment data is.<p>2.  The minimum wage in the US is quite low, and has very rarely been increased sharply.  As a result, we&#x27;ve never really seen any large spike in unemployment, but we also have no reason to think we wouldn&#x27;t if we ever did.  Nobody has ever tried a minimum wage of, say, 80% of the median wage to see what it would do.<p>3. Although not entirely conclusive, the data from the largest increases does seem to show spikes in the minimum wage.  For example, the University of Washington released their study on the impact of Seattle raising their minimum wage from $11 to $13 per hour, and found that the reduction in hours was 3 times higher than the increase in wages, meaning minimum wage workers <i>lost</i> $125 per month in earnings[1].  By contrast, the best studies which show no effect covered smaller increases or increases to a lower level (as a % of median wages).<p>For example, one of the most famous of the &quot;minimum wage has no effect&quot; studies was by Card and Krueger, and covered a rise in the minimum wage in NJ from $4.25 to $5.05 in 1992.  Adjusting for inflation, $5.05 is around $8.90 in 2017 dollars.  It&#x27;s entirely plausible that $9 might not cause any measurable impact, but $13 would.  In fact, there is some data which suggests that around 50% of median hourly wages is an inflection point at which point you start to see real impacts.  And median hourly wages in the US is slightly less than $25&#x2F;hour, which is slightly less than twice $13, so in fact that&#x27;s entirely unsurprising.<p>&gt; When the University of Chicago Booth School of Business asked a panel of prominent economists in 2013 whether increasing the minimum wage to $9 would “make it noticeably harder for low-skilled workers to find employment,” the responses were split down the middle.<p>$9 is a level at which we&#x27;d expect to see a minimal effect.  It&#x27;s plausible to think that there might be SOME effect, or that there might be no measurable effect, and some studies have shown such an effect while others have not.  It&#x27;s not surprising that economists would split.  But splitting over $9 would have an impact doesn&#x27;t mean there&#x27;s any debate over whether an impact exists at some level, and in fact, there is not.  And it seems like $13 does have a measurable impact, and there&#x27;s really no doubt that $30 or $50&#x2F;hour would have a very major impact.<p>&gt; The real impact of the minimum wage, however, is much less clear than these talking points might indicate.<p>No.  There is, at most, a debate over how big an increase it would take for the impact to become clear.<p>[1]: <a href="http:&#x2F;&#x2F;www.nber.org&#x2F;papers&#x2F;w23532.pdf" rel="nofollow">http:&#x2F;&#x2F;www.nber.org&#x2F;papers&#x2F;w23532.pdf</a>