NPR has a piece on Washington State, where the statewide minimum wage, at $9.04 an hour, is the highest in the country:
There's even a theory that the state minimum wage — which is counted separately from tips — might explain the understaffing and lousy service at some Seattle restaurants. It's Economy 101: The more you raise the price of something — employment, in this case — the less of it there'll be.
"I don't think there's any sensible economist who thinks you could double the minimum wage and not throw a lot of people out of work," says David Neumark, director of the Center for Economics and Public Policy at University of California, Irvine. There is a debate, he says, over the effect of incremental raises for the small group of largely unskilled workers who earn the minimum wage.
"The consensus from a lot of studies I've surveyed — including my own — says that a 10 percent increase in the minimum reduces employment of those very low-skilled groups by about 1 to 2 percent," he says.
Also writing about wage regulation is libertarian law professor Richard Epstein, whose focus is on a New York City proposal that "would impose one of two living wage requirements on employers who receive $1 million or more in discretionary financial assistance from New York City. Either pay workers $10-per-hour in wages plus benefits, or pay them $11.50-per-hour without benefits."
Writes Professor Epstein:
When the minimum wage law was equal to $5.15, about 6.6 million individuals earned less than the $7.25 wage level. By 2010, after the wage level was increased, unemployment rates did move sharply upward. Some of today's workers will be lucky enough to ride the living-wage tide upward, but others are likely to be cast aside. ... The imposition of a high minimum living wage will reduce, all other things being equal, the demand for labor.
... the key variable is the gap between the current market wage and the minimum wage. Where that gap is small, the minimum wage law will have a small effect. Where it is larger, it will have a large effect. The most ardent supporters of the minimum wage have to recognize that point, for otherwise they would raise the living wage level to $25, $50, or $100.