NCPA - National Center for Policy Analysis

Armey/Campbell: Rising Unemployment Follows Increases

May 22, 1996

Since 1973, the nation has increased the minimum wage nine times, over two-year periods. In every two-year period except one, unemployment increased. The single exception was in the period 1977-79, when the economy was expanding.

House Majority Leader Dick Armey (R-TX), a former economics professor, looked at how increases in the minimum wage have affected employment in recent two-year periods.

  • Directly following a 32 percent increase, unemployment rose from 4.9 percent to 8.8 percent in the period 1973-75.
  • When the minimum was increased 17 percent, the unemployment rate jumped from 6.1 percent to 7.1 percent from 1978 to 1980.
  • In the period 1979-81, unemployment increased from 5.8 percent to 7.6 percent after the minimum was increased 16 percent.
  • Most recently, 1989-1991, unemployment zipped from 5.3 to 6.7 percent following a 27 percent increase in the minimum.

Armey explains that during strong growth periods, increases in the minimum wage can precede growth in employment, but that this in spite of -- not because of -- increasing the minimum wage. But even then, some workers will lose their jobs.

As Joseph Stiglitz, chairman of President Clinton's Council of Economic Advisers, wrote in his 1992 textbook, "...substantial unemployment is generated with any increase in the minimum wage."

Source: Rep. Dick Armey (R-TX) and Rep. Tom Campbell (R-CA) "Unskilled Labor Vs. the Unions," Washington Times, May 22, 1996.


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