Increasing the minimum wage does not necessarily reduce employment

Recent months have seen President Obama make a renewed push to address inequality in the U.S., especially via one policy lever he has focused on previously- raising the minimum wage. For many, conventional economic wisdom states that raising the minimum wage costs jobs, as employers are less willing to take on staff at higher rates of pay. Alan Manning takes a close look at the economics and the evidence of these claims, finding that one of their basic assumptions, that labor markets are highly competitive, does not hold. He argues that in light of this, and of empirical evidence from academic studies of wages and employment, it is very difficult to claim that wages have a significant effect on employment in either direction.