Clinton’s Wage Hike Would Destroy Nearly 800,000 Jobs

Analysis finds lower earners hardest hit

Hillary Clinton
November 17, 2015

Hillary Clinton’s minimum wage hike could cut nearly 800,000 jobs with people at the bottom end of the pay scale suffering the steepest job losses, according to a study by two leading economists.

The Democratic frontrunner has said that she supports a $12 hourly wage and reiterated that position at Saturday’s Democratic debate because "that is what the Democrats in the Senate have put forward."

Sen. Patty Murray (D., Wash.) introduced the $12 wage as the Raise the Wage Act in March. An analysis conducted by economists William E. Even of Miami University and David Macpherson from Trinity University found that the bill would eliminate 770,000 jobs. Nearly 85 percent of the estimated job losses will come from those earning less than $100,000 each year.

"Presidential primary candidate Hillary Clinton has argued for a minimum wage increase as part of her policy platform to boost the middle class. But this analysis shows that those with household incomes between $35,000 and up to $100,000 would bear a large portion (43%) of the job loss from this higher minimum wage," the analysis says.

The middle class will not be the only earners hurt by this policy. More than 40 percent of the job losses would come at the expense of those earning less than $35,000 per year.

The Clinton campaign did not respond to request for comment.

The economists employed the same methodology used by the nonpartisan Congressional Budget Office, which found that President Obama’s proposed $10.10 wage would cut 500,000 jobs.

The $12 minimum wage is 66 percent higher than the current federal minimum of $7.25, but that is on the lower end of the spectrum for the Democratic presidential primary.

Insurgent socialist Sen. Bernie Sanders (I., Vt) and Maryland Gov. Martin O’Malley each support the $15 wage advocated by political powerhouse Service Employers International Union (SEIU). Des Moines Register columnist Kathie Obradovich asked Sanders what he thought of criticism of the $15 rate from an influential Democratic economist. 

"Former chair of the Council of Economic Advisors, Alan Krueger, has said the national increase of $15.00 could lead to undesirable and unintended consequences like job loss. What level of job loss would you consider unacceptable?" she asked.

"No public policy doesn't have in some cases negative consequences," Sanders said.

Clinton credited Krueger’s skepticism of the $15 rate for her decision not to embrace it, even after praising SEIU’s advocacy for the policy.

"What Alan Krueger said in the piece you're referring to is that if we went to $15.00 there are no international comparisons," she said. "If you go to $12.00 it would be the highest historical average we've ever had."

Michael Saltsman, a labor expert at the Employment Policies Institute, said that if Clinton were serious about potential job cuts, she would pay attention to the consensus among economists that dramatic minimum wage hikes lead to higher unemployment.

"Hillary Clinton is trying to have it both ways on the minimum wage, rejecting the national $15 demand promoted by labor unions while encouraging certain locales to embrace it," he said. "Even her compromise position of a $12 federal minimum wage would have dramatic negative effects for less-skilled employees in the middle-income households she's focused her campaign on."

The institute has examined the effects of minimum wage hikes similar to Clinton’s $12 proposal. It conducted a survey of more than 200 businesses in Oakland, which increased its wage from $9 to $12.25 in March.

"Of the 223 businesses surveyed, 56 percent reported that the new minimum wage caused a large increase in their labor costs," the survey found. "Of the businesses surveyed here, roughly one in 10 said it was ‘very likely’ to close, with another 18 percent ‘somewhat likely’ to close."

Saltsman said that Clinton should consider the course of action taken by a former president who faced a similar predicament in the recent past.

"Economic advisers to her husband Bill rejected as "too aggressive" a 40-percent minimum wage hike in 1998. The Clinton campaign should ask itself why a 66-percent hike today is any different," Saltsman said.