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Good News on the Minimum Wage

Working Americans get some good news today out of three states -- Montana, New Jersey, and Pennsylvania -- where progress is being made on the minimum wage. In Pennsylvania, Governor Ed Rendell signed a staggered, two-dollar increase into law. In Montana, signature gatherers succeeded in qualifying for the ballot an initiative to increase the minimum wage and tie the minimum to inflation.

In New Jersey, the news is different but, in some ways, better. New Jersey already has a minimum wage higher than the federal level. It is noteworthy in that historically, Jersey's minimum has been higher than neighboring Pennsylvania, creating a very interesting experiment by which to judge the employment impacts of a higher minimum wage. Over a decade ago, academic studies began finding correlations between higher minimum wages and higher rates of job growth. Those studies occured in Jersey and elsewhere.

But the good news isn't simply that the evidence is bearing out the fact that these increases in the minimum wage appear to actually be good for local businesses. The good news is that Jersey employers are starting to "get it." Or, as John Samo of the Employers Association of New Jersey put it: "We've seen no evidence that it [a higher minimum wage] cost jobs."

While conservatives like to argue that such claims fly in the face of basic economics, the reasons for this are quite clear. Most low-wage labor -- fast food, janitors, etc. -- is necessary and also can't be outsourced. If employers are required to pay more, they pay more because there are few other options. The increase in pay to these workers in turn causes more spending in the local economy and can actually be of benefit in terms of economic growth.

The central reason to support increasing the minimum wage remains unchanged: it is simply cruel to think anyone who works full time should live so far below the poverty line. But it is reassuring to have more clear evidence that yet another conservative canard about paying people fair wages is just another load of bunk.

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