High Minimum Wage and High Unemployment: Perfect Together


When this is your regional dish, a job is the least of your worries.

Sixty-three percent of states with high minimum wage laws are suffering unemployment rates higher than the national average (which is now at 9.1 percent and expected to rise to 9.2 percent when the September Employment Situation Summary is released Friday). 

That's my tortured finding from 247wallst.com's pageant of the eight highest-minimum-wage states in the U.S.A. 

Cross referencing these eight with state-level unemployment numbers from the U.S. Bureau of Labor Statistics, we find that five are among the states with higher than average unemployment, and two of them (sick men of North America California and Nevada) are at the top of the flyblown pile. 

In ascending order of state-ordered generosity, the eight living-wagiest states are: 

8. California (unemployment 12.1 percent; minimum wage $8.00)
7. Massachusetts (unemployment 7.4 percent; minimum wage $8.00)
6. Vermont (unemployment 5.9 percent; minimum wage $8.15)
5. Connecticut (unemployment 9.0 percent; minimum wage $8.25)
4. Illinois (unemployment 9.9 percent; minimum wage $8.25)
3. Nevada (unemployment 13.4 percent; minimum wage $8.25)
2. Oregon (unemployment 9.6 percent; minimum wage  $8.50)
1. Washington (unemployment 9.3 percent; minimum wage $8.67)

Full story, which contains some interesting data on how cost of living, median income and union membership correlate with minimum wage. 

Fun fact: They were originally going to call them the Maine Patriots.

I would call the minimum-wage/joblessness correlation real but not overwhelming. It would be interesting to see another data point in this list: number of pages in each state's legal code, along with the average number of pages of statewide regulations in the United States.  

There's a common sense argument that requiring all employers to pay higher wages depresses the inclination to hire, especially at the entry level – and even the United Kingdom's forthrightly named Low Pay Commission conceded recently that "Firms may be reluctant to create jobs by recruiting inexperienced staff because they are put off by the increased wage bill." But the variables that affect hiring go beyond base pay. 

If this is a Gloucesterman, where's the heroin?

The real stunner for me, though, is how New England manages to beat the odds. The three states where high minimum wage laws do not correlate with high unemployment are all clustered in the northeast. I would have led with that news, but I suspect I'm not the only person who finds the phrase "New England" eyelid-heavying and the incantation "Massachusetts…Connecticut…Vermont" coma-inducing. 

Still, the region's relative employment health is noteworthy. Rounding out the New England unemployment figures we have Maine (7.6  percent) and New Hampshire (5.3 percent) far below the dismal national unemployment rate and only tiny, clean-living Rhode Island (10.6 percent) above it. 

Any theories? Did the flow of hardworking immigrants from Portugal and County Cork never slow down? Is it Yankee ingenuity? A maple syrup boom the mainstream media have been ignoring? Brisk business in fall-foliage tourism?