Hike in minimum wage will not hurt job growth, US study in 6 cities found

NEW YORK: Minimum wage increases in six United States cities boosted worker pay without harming job growth, according to a study released by University of California at Berkeley researchers recently.

Economists at the school’s Centre on Wage and Employment Dynamics examined US Labour Department data from the first major cities to raise their local wage floors above US$10 (RM41.40) an hour: Washington, Chicago, Seattle, San Francisco, Oakland, and San Jose.

In the food services industry, a major employer of low wage workers, a 10 per cent increase in minimum pay increased average weekly earnings 1.3 to 2.5 per cent on average across the six cities, the authors found.

They found no “significant negative employment effects”. Instead, they estimated the impact on jobs at between a 0.3 per cent reduction and a 1.1 per cent gain.

“Policies are working as the policymakers intended,” said paper co-author Sylvia Allegretto, a labour economist and co-chair of the centre, in an interview.

While the federal minimum wage has been US$7.25 per hour since 2009, cities and states have made a slew of increases in their own wage floors, spurred in part by protests by low-wage workers in industries such as fast food.

“With a substantial number of additional cities and states poised to soon enact similar policies, a large portion of the US labour market will be held to a higher wage standard than has been typical over the past 50 years,” the economists wrote.

As a result, they estimate, such policies will increase pay directly for 15 to 30 per cent of the workforce in cities raising their minimums and as much as 50 per cent of the workforce in some industries and regions.