Last week 20 of Colorado’s prominent economists from universities and research institutions penned a letter in support of Amendment 70, which would gradually raise the state’s minimum wage from $8.31 to $12 by 2020.
The letter, which is posted in full below, draws upon a large body of evidence that overwhelmingly shows a wage hike would not cause significant job losses.
Opponents of the measure cite the potential for lost jobs as a primary reason for their stance against Amendment 70.
The letter also suggests Amendment 70 could boost the state’s economy as low-wage workers spend their extra earnings. A recent DU study predicted a $400 million increase in the state’s Gross Domestic Product (GDP) if the measure passes.
September 28, 2016
Joint letter of support by Colorado economists:
The Colorado economy has experienced steady growth in recent years. Real wages, however, for the lowest paid workers in the state have been flat or falling for the last decade. This trend in wages has spurred action across the country to increase the minimum wage and heightened interest in examining the impact of these increases. Scores of studies have been conducted to understand the employment effects of minimum wage increases. Results from the most rigorous studies overwhelmingly suggest that minimum wage increases have little to no negative effect on employment of low wage workers and, in fact, could stimulate consumer demand and economic activity as low wage workers spend their additional earnings.
Among this body of research are two leading meta-studies which pooled data from over four decades of research. The first by Hristos Doucouliagos and T.D. Stanley (2009) looked at nearly 1,500 findings from 64 studies mapping the conclusions against the precision of their findings and firmly concluded that minimum wage increases result in little or no significant impact on job growth. Another meta-study by Dale Belman and Paul Wolfson (2014) reviewed over 70 studies and concluded that “if negative effects on employment are present, they are too small to be statistically detectable” and therefore are unlikely to impact labor markets.
These meta-analyses are supported by the work of economists Arindrajit Dube, T. William Lester and Michael Reich (2010) who examined the real-world impact of raising the minimum wage on jobs by comparing outcomes in 288 pairs of neighboring counties, where one county had a higher minimum wage between 1990 and 2006. This innovative research approach allowed the economists to more precisely isolate the impact of the minimum wage increase. The study concluded that higher minimum wages did not lead businesses to reduce hiring or shift jobs to neighboring counties with a lower wage.
Today, the minimum wage in Colorado is $8.31 or less than $300 a week after taxes. Amendment 70 would raise the statewide minimum wage to $12 by 2020, directly boosting the wages of an estimated 420,000 workers, nearly 20 percent of the workforce. Nearly nine out of 10 workers who will benefit from this increase are over the age of 20, nearly 30 percent have children, and many are women, who depend on these low wage jobs to support children. Workers are also customers, so when they are paid more, they can buy more needed goods and services, boosting sales at local businesses. The purchasing power of minimum wage workers has declined substantially since the 1960’s. The minimum wage in Colorado would be $11.12 today if it had kept pace with inflation since 1968.
The recent developments in the academic literature on the employment effects of minimum wage increases clearly show little to no impact on jobs while providing a needed increase in earnings to low wage workers. We believe raising the minimum wage would be good for Colorado.
Alexandra Bernasek, Professor and Department Chair, Economics Department, Colorado State University
Elissa Braunstein, Associate Professor, Economics Department, Colorado State University
Paula Cole, Assistant Professor, Economics Department, University of Denver
Daphne Greenwood, Professor of Economics, University of Colorado-Colorado Springs
Kevin Duncan, Economics Professor, Hasan School of Business, Colorado State University-Pueblo
Anders Fremstad, Assistant Professor, Economics Department, Colorado State University
Peter Sai-Wing Ho, Associate Professor and Department Chair, Department of Economics, University of Denver
Michael V. Martin, Former Chancellor, Colorado State University System
Tracy Mott, Associate Professor, Economics Department, University of Denver
Anita Alves Pena, Associate Professor, Economics Department, Colorado State University
Chiara Piovani, Assistant Professor, Economics Department, University of Denver
Martin Shields, Professor of Economics and Director of Regional Economics Institute, Colorado State University
Steven Shulman, Professor, Economics Department, Colorado State University
Chris Stiffler, Economist, Colorado Fiscal Institute
Jack Strauss, Miller Chair of Applied Economics, Reiman School of Finance, Daniels School of Business, University of Denver
Daniele Tavani, Associate Professor, Economics Department, Colorado State University
Robert Urquhart, Associate Professor, Economics Department, University of Denver
Ramaa Vasudevan, Associate Professor, Economics Department, Colorado State University
Sarah Wilhelm, Economist, SA Wilhelm Consulting
Yavuz Yasar, Associate Professor, Economics Department, University of Denver