Economics professor Tyler Cowen points to “new negative results” of “minimum wage hikes”: High state minimum wage laws shrink the pipeline of people going into the life sciences industry, cut the number of students working in research labs where life-saving research is conducted, and reduce the amount of lab experience students acquire even when they do find work in a lab. The results were discovered in a recent study by Professor Ina Ganguli of the University of Massachusetts and Boston University Professor Raviv Murciano-Goroff. Their study explains:
We study how exposure to scientific research in university laboratories influences students’ pursuit of careers in science. Using administrative data from thousands of research labs linked to student career outcomes and a difference-in-differences design, we show that state minimum wage increases reduce employment of undergraduate research assistants in labs by 7.4%. Undergraduates exposed to these minimum wage increases graduate with 18.1% fewer quarters of lab experience. Using minimum wage changes as an instrumental variable, we estimate that one fewer quarter working in a lab, particularly early in college, reduces the probability of working in the life sciences industry by 2 percentage points and of pursuing doctoral education by 7 percentage points. These effects are attenuated for students supported by the Federal Work-Study program. Our findings highlight how labor market policies can shape the career paths of future scientists and the importance of budget flexibility for principal investigators providing undergraduates with research experience.
State minimum wages are often way above the federally-mandated minimum wage. 21 states raised their minimum wage on January 1, 2025.
On January 1, the minimum wage went up to $16.50 in California, $16.35 in Connecticut, $15.50 in New York State, $15.49 in New Jersey, $15 in Illinois, Delaware, and Rhode Island, $14.81 in Colorado, $14.70 in Arizona, $14.65 in Maine, $14.01 in Vermont, $13.75 in Missouri, $13.50 in Nebraska, $12.41 in Virginia, $11.50 in South Dakota, $11.13 in Minnesota, $10.70 in Ohio, and $10.50 in Montana.
California has a minimum wage for fast-food workers that is higher than its general minimum wage. California fast-food workers have to be paid at least $20 per hour. That high minimum wage caused a number of fast-food franchises to close, and resulted in others firing some employees. Franchise owners of Pizza Hut and Round Table Pizza laid off around 1,280 delivery drivers in preparation for the wage hike, reported the Wall Street Journal.
Raising the minimum wage to even $16 per hour can cause significant job losses in areas with low median wages. In such areas, living costs are often low, too, and a married couple each making $15 an hour can sometimes live a middle-class lifestyle and afford their own home. There are dirt-cheap counties in the U.S. where the median hourly income is less than $15 an hour (such as Mississippi’s Claiborne, Holmes, and Humphreys counties), yet most people there own their own home, and have a home that is bigger than the average European lives in, because it costs so little to live there. Working-class Americans typically live in bigger homes than middle-class Europeans.
When the minimum wage is increased beyond a certain level, employers can’t pass the cost of a minimum wage increase on to their customers, and they start laying off employees instead.
Minimum wage hikes increase consumer prices, as economists have found. An April 2019 survey found that “minimum wage hikes usually mean higher menu prices and fewer employee hours” in restaurants.
Minimum wage hikes can lead to tax increases. In 2016, California’s legislative analyst estimated that the gradual increase in California’s minimum wage to $15 an hour would cost taxpayers $3.6 billion more a year in government pay alone. Easy-to-perform, unskilled jobs in state and local governments historically often paid less than $15 per hour. States had no difficulty hiring people for far less than $15 per hour, because those government jobs were not demanding, and often came with excellent benefits.
