My AEI colleague Stan Veuger summarizes a new paper co-authored by my pal Jeffrey Clemens:

In 2007, Congress passed a series of minimum wage increases that president Bush signed into law. The last increase, raising the federal minimum wage from $6.55 to $7.25, took effect on July 24, 2009. Some states had minimum wage laws on the book that already mandated a wage higher than $7.25, so those states weren’t affected by the new federal law. In a new research paper, Michael Wither, a Ph.D. candidate at the University of California, San Diego (UCSD), and his adviser, UCSD economics professor Jeffrey Clemens (disclosure: one of my classmates in graduate school) use the differences between these two groups of states to estimate the impact of this minimum wage increase. They do so by looking at two different groups of workers. One group, the “target” group as they call it, made less than $7.50, on average, during the previous year. The other group, the “control” group, made between $7.50 and $10 in the year before the new federal minimum wage kicked in.
So what did happen after July 24, 2009? In the states that already had high minimum wages, we shouldn’t expect much to change: the difference between the target and control groups should remain steady. In the other states, on the other hand, workers in the target group are no longer allowed to accept some of the jobs they used to hold, as some of those jobs used to pay less than the new minimum wage. Compared to the control group, we should expect their wages to go up, on average, as long as they find jobs, but we would also expect them to find employment less often.
And that is precisely what happened. Clemens and Wither find that after July 2009, a smaller percentage of low-skilled workers in the affected states made less than $7.50 an hour, but they also find that a smaller percentage of them did not manage to find any employment whatsoever. After a year, in the midst of rough economic times, the targeted workers found themselves 6 percentage points less likely to have a job, thanks to the well-intentioned efforts of the United States Congress. Remember that we know the local economy wasn’t to blame: that’s what our control group was for. And we know it wasn’t the national economy, or broad labor market trends: none of this happened in the states that already had higher minimum wages.

There’s more, too, which you can find here.

— Michael R. Strain is deputy director of economic policy studies and resident scholar at the American Enterprise Institute. You can follow him on Twitter at twitter.com/MichaelRStrain.