Most arguments against the minimum wage that you'll find online were written a decade ago, cite no studies, and assume the reader already agrees. Most rebuttals have the opposite habit: they cite one famous study and declare the matter closed.

This page sets out the nine arguments we find most persuasive against minimum wage laws. For each: the claim, the best evidence for it, and the strongest evidence against it, flagged in a callout so you can't miss it. The economics isn't settled, and we won't pretend otherwise. Our view is that the case against the minimum wage is strong enough to be argued with the inconvenient studies on the table.

How to read this page

The federal minimum wage has been $7.25 an hour since July 2009, but many states and cities set much higher floors of their own, so the American debate is really about dozens of minimum wages at once. And almost every economist agrees that a wage floor's effects depend on its bite: how high it sits relative to the wages local employers would otherwise pay. Keep that in mind. Several of the strongest counter-studies examined moderate increases; several of the strongest supporting studies examined high ones.

Our minimum wage research tracker collects the studies themselves, with summaries written to be fair to both sides.

1. A minimum wage is a price control, and price controls ration

The claim. A minimum wage does not make anyone's work more valuable. It makes it illegal to employ someone at less than a set price. If a worker's output is worth $12 an hour to an employer and the law says $15, the job either changes shape or goes away. Milton Friedman's point was that the law forbids exactly the jobs the least skilled could get, so its costs land on the people it is meant to protect.

The best evidence. This is the same reasoning that explains why rent control produces housing shortages, and for most of the twentieth century US studies broadly fit it, finding modest job losses concentrated among teenagers. The Congressional Budget Office's estimates keep landing in the same place. In 2019 the CBO's central estimate for a $15 federal minimum was about 1.3 million fewer jobs. When it revisited the question in 2021, after giving more weight to newer and more optimistic research, its central estimate was about 1.4 million. Those came alongside raises for roughly 17 million workers: that is the trade on offer.

Strongest counter-evidence In 1994 David Card and Alan Krueger compared fast-food restaurants in New Jersey, which had just raised its minimum wage, with restaurants across the border in Pennsylvania, and found no relative fall in employment. Card later shared the 2021 Nobel prize partly on the strength of that body of work. Behind it sits a theoretical challenge: if employers have power to set wages (monopsony), a well-chosen floor can raise pay and employment at once. The CBO's own ranges also ran from close to zero job loss at the low end. The price-control logic is sound, but how much rationing it causes in practice is a live empirical question.

Read more: what Milton Friedman actually argued, what the CBO said about a $15 minimum, the Card-Krueger study explained, and monopsony, the best case for a minimum wage.

2. The cost falls hardest on people trying to get their first job

The claim. An employer's willingness to hire depends on how much value it expects a worker to add. Experienced adults can usually clear a higher bar. A 17-year-old with no work history, or an adult coming back after years out of the labor force, often can't yet. A first job matters less for what it pays than for what it leads to. Raise the floor high enough and the first rung goes missing, while workers already on the ladder keep climbing.

The best evidence. In their 2008 book Minimum Wages, David Neumark and William Wascher concluded that most credible studies find job losses for teenagers and the least skilled. A 2022 review of the newer US research by Neumark and Peter Shirley pointed the same way for teens, young adults and the less educated. Two other studies sharpen the point. Jonathan Meer and Jeremy West found that minimum wage increases show up mainly as slower job growth rather than immediate layoffs, which is how a missing first rung would show up. And in Seattle, a University of Washington team that followed individual workers found that those already experienced in low-wage jobs tended to come out ahead, while fewer new workers entered low-wage employment.

Strongest counter-evidence Doruk Cengiz, Arindrajit Dube, Attila Lindner and Ben Zipperer, studying 138 state-level increases in the Quarterly Journal of Economics (2019), counted jobs paid just below and just above each new minimum. They found that jobs paying under the new floor disappeared, but roughly as many appeared just above it, leaving overall low-wage employment close to unchanged for five years. A 2009 meta-analysis by Hristos Doucouliagos and T.D. Stanley also argued that the published literature overstates job losses, because studies that find a negative effect are more likely to be published. These are serious findings, and they apply most clearly to the moderate increases studied.

Read more: the first job ladder: why entry-level work matters.

3. Counting jobs misses most of how employers adjust

The claim. Layoffs are the bluntest response to a higher wage floor, and usually the last one an employer reaches for. It can cut shifts, trim benefits, demand more work per hour, delay hiring, or raise prices. A study that only counts jobs can find "no effect" while workers are worse off.

The best evidence. Seattle is the clearest case, because Washington State's unemployment insurance records include hours worked, which most states' records don't. When the University of Washington team studied the city's step up to $13 an hour, their 2017 working paper found that hourly pay in low-wage jobs rose by about 3 percent while hours in those jobs fell by about 9 percent. (The published 2022 version is more cautious about the aggregate figures, but still finds significant hour reductions for less experienced workers.) Their estimate was that the average low-wage job paid around $125 less per month than it would have without the increase. The finding was published in the American Economic Journal: Economic Policy in 2022. Jeffrey Clemens, Lisa Kahn and Jonathan Meer have also presented evidence that increases reduce employer-provided health coverage.

Strongest counter-evidence A Berkeley team led by Michael Reich studied the same city and found that restaurant wages rose without any detectable fall in food-service employment. Critics of the UW study point out that it left out multi-site employers such as chains, so some of the "lost" hours may simply have moved to businesses the data couldn't see. And the UW team's own follow-up found that experienced workers kept their earnings gains even with fewer hours. Seattle shows where the real story can hide; it doesn't prove every increase reduces take-home pay.

Read more: what happened when Seattle went to $15.

4. It is a poorly aimed weapon against poverty

The claim. The minimum wage targets low hourly wages. Poverty is about low household incomes. The two overlap less than people assume. Many minimum-wage earners are teenagers or second earners in households that aren't poor, while many of the poorest households have no one working at all.

The best evidence. CBO analyses have repeatedly found that a large share of the benefits of a higher minimum go to families above the poverty line. The 2021 report expected a $15 minimum to raise pay for about 17 million workers but lift only about 0.9 million people out of poverty, at a cost of about 1.4 million jobs. Richard Burkhauser and Joseph Sabia examined state and federal increases between 1988 and 2003 and found no measurable effect on poverty rates. Thomas MaCurdy, studying the 1996 federal increase in the Journal of Political Economy in 2015, concluded that its benefits were spread across the income distribution rather than concentrated on the poor.

Strongest counter-evidence Arindrajit Dube's 2019 study of family incomes, in the American Economic Journal: Applied Economics, found that minimum wage increases did raise incomes at the bottom and reduce poverty, with effects that persisted for several years. The CBO, for its part, expected families near the bottom to come out ahead on balance even after job losses. "Poorly targeted" is not the same as "useless," and the honest version of this argument says only the first.

Read more: minimum wage vs. EITC and the CBO's estimates in full.

5. A better tool already exists

The claim. If the goal is to raise the incomes of low-paid working families, the tax system can do it without making anyone more expensive to hire. Friedman proposed a negative income tax in Capitalism and Freedom in 1962. Its practical descendant, the Earned Income Tax Credit, was enacted in 1975 and has been expanded by both parties since. It tops up low earnings, scales with family size, and is paid for by taxpayers broadly rather than by low-wage businesses and their customers.

The best evidence. The EITC's track record on work is unusually good. Nada Eissa and Jeffrey Liebman, studying the 1986 expansion in the Quarterly Journal of Economics, found that it drew substantial numbers of single mothers into the labor force. A credit rewards taking a job rather than raising the cost of offering one, and it is targeted by household income, which answers the problem in argument 4.

A wage floor helps the workers who keep their jobs. A wage subsidy helps the workers who take them.
Strongest counter-evidence Jesse Rothstein (2010) found that employers capture part of the EITC's value through lower pre-tax wages, because the credit pulls more people into low-wage work. That is the theoretical case for pairing the two policies: David Lee and Emmanuel Saez argued in 2012 that a minimum wage can stop a work subsidy from being competed away, making the two complements rather than substitutes. The EITC is also far less generous for workers without children. The case for replacing the minimum wage with transfers is strongest when the transfers are actually large enough to do the job.

Read more: minimum wage vs. EITC: two very different ways to help.

6. One number cannot fit a country this varied

The claim. Wages and productivity differ enormously between Manhattan and the Mississippi Delta. A federal floor that barely registers in one place can sit near the median wage in another, so a national minimum does its harm where it can least be absorbed.

The best evidence. Puerto Rico is the classic warning. As federal minimum wage rules were extended to the island, the floor reached a level far closer to local wages than on the mainland, and Alida Castillo-Freeman and Richard Freeman concluded in a 1992 NBER study that it substantially reduced employment there. More recently, Jeffrey Clemens and Michael Wither examined the federal increases of 2007 to 2009, which bound in states that hadn't already set higher minimums and not in states that had. They found reduced employment among the low-wage workers affected, and slower subsequent income growth for them, in the Journal of Public Economics (2019).

Strongest counter-evidence Card and Krueger disputed the Puerto Rico findings in their 1995 book Myth and Measurement, and Clemens and Wither's results overlap with the Great Recession, which makes it harder to separate the wage floor from the downturn. And if the problem is a uniform national number, the obvious fix is regional floors, not abolition. Our reply is that the same logic applies within states and cities, but taken alone this is a case against high uniform floors more than against every floor.

Read more: a state-by-state guide to minimum wage laws.

7. Higher wage floors make machines relatively cheaper

The claim. When the law raises the price of low-wage labor and the price of a kiosk or a dishwashing machine stays the same, the machine becomes the better deal for some tasks. The jobs most exposed are the routine ones, which are also the jobs most often held by people with the fewest alternatives. Because equipment is replaced slowly, the effect may build for years after most studies stop looking.

The best evidence. Grace Lordan and David Neumark, in Labour Economics (2018), found that higher minimum wages reduced the share of low-skilled workers in automatable jobs, with notable effects in manufacturing and among older low-skilled workers. Daniel Aaronson and Brian Phelan, in the Economic Journal (2019), found that minimum wage increases cut employment in low-wage jobs heavy in routine cognitive tasks, the kind of work a cashier does, but not in manual or non-routine ones. Isaac Sorkin's work on "putty-clay" capital explains why short-run studies could understate this.

Strongest counter-evidence Ordering screens and self-checkout spread in places with low minimum wages too, driven by cheaper technology and changing customer habits. The automation studies show a shift in the composition of low-wage work more clearly than a large net loss of jobs. The direction is well supported; the size is still open.

Read more: kiosks, robots, and the minimum wage.

8. Customers, many of them poor, pay part of the bill

The claim. A minimum wage is often described as a transfer from employers to workers. A good part of it is actually a transfer from customers. The businesses most affected, such as fast food and discount retail, serve many low- and middle-income households, so a higher floor works partly like a sales tax on what they buy.

The best evidence. Even the Card-Krueger study found that meal prices appear to have risen in New Jersey relative to Pennsylvania. Daniel Aaronson's 2001 study of restaurant prices found that they rise after minimum wage increases, consistent with costs being passed on. Péter Harasztosi and Attila Lindner, studying a very large minimum wage increase in Hungary in the American Economic Review (2019), estimated that consumers bore most of its cost through higher prices. MaCurdy's analysis of the 1996 US increase reached a similar conclusion about who pays, and found that the higher prices fell on poor households as well as better-off ones, much as a sales tax would.

Strongest counter-evidence Price pass-through is, in a sense, the defenders' answer to the employment argument: if consumers pay, fewer jobs need to be lost, and the Hungarian study found relatively small employment effects for exactly that reason. This argument shows the minimum wage isn't a free lunch paid out of profits, but whether it is regressive overall depends on who gets the raises.

Read more: the pass-through studies are listed in our research tracker.

9. Its losers are invisible, so it is judged on intentions

The claim. The worker who gets a raise knows it. The worker who never gets hired, or whose shifts quietly shrink, has no way of knowing the law was the reason. So increases are reliably popular whatever their effects, and the policy is judged by its intentions. Those intentions were never as simple as the textbook story says.

The best evidence. The economist Thomas C. Leonard has documented, in Illiberal Reformers (2016) and earlier in the Journal of Economic Perspectives, that some prominent Progressive Era advocates understood perfectly well that a binding wage floor would price some workers out of jobs, and saw that as a feature: a way of removing people they considered "unemployable" from the labor market. Nearly all of the early state laws applied only to women and minors. When the Fair Labor Standards Act created the federal minimum in 1938, at 25 cents an hour, it initially covered only part of the workforce.

Strongest counter-evidence The motives of some long-dead reformers say nothing about what a minimum wage does in 2026, and the humanitarian motive was real and widespread. Nor are the losers wholly invisible to researchers: the modern literature exists precisely because economists went looking for them, and several careful studies didn't find many. This argument is best read as a reason to demand evidence, not as evidence in itself.

Read more: a short history of the American minimum wage.

Where the evidence leaves us

Almost every argument here has a credible study pointing the other way. That is the honest state of the research. But the arguments don't have to be taken one at a time. Together they describe a policy whose benefits are visible and go to people who already have jobs, and whose costs are scattered across fewer hours, slower hiring, missing first jobs and higher prices, much of it hard to see in any single dataset.

Here's roughly what we think the evidence supports:

  • Small, gradual increases in high-wage places often show little measurable harm. We don't dispute that.
  • High floors relative to local wages carry real and probably larger risks, especially for young and inexperienced workers.
  • Employment counts alone are too narrow a measure. Hours, hiring, benefits and prices matter.
  • As anti-poverty policy, the minimum wage is imprecise, and direct income support through the tax system can be aimed far better.

Our position is that a policy with those properties should not be the main tool for helping low-income workers, and that the case for moving that job to the tax system is strong. We hold it with more confidence about high wage floors than about modest ones, and we'd rather lose an argument on the evidence than win it by leaving evidence out. If you'd like to test the tradeoffs yourself, the simulator lets you set a wage floor and see which assumptions drive the result.

Frequently asked questions

What is the main argument against the minimum wage?

The core argument is that a minimum wage is a price control on labor. It does not make anyone more productive; it makes it illegal to hire someone whose work is worth less to an employer than the legal floor. The workers most likely to be priced out are the young, the inexperienced and the less educated, who are the people the law is meant to help.

Does the minimum wage cause unemployment?

It depends on how high the floor is relative to local wages, and economists still disagree about the size of the effect. Card and Krueger's New Jersey study and later work by Cengiz, Dube, Lindner and Zipperer found little or no job loss from moderate increases. Reviews by David Neumark and coauthors find that most studies point to job losses for teens and less-skilled workers. The CBO's central estimate for a $15 federal minimum was about 1.3 to 1.4 million fewer jobs, inside a wide range that started near zero.

Who is hurt most by a high minimum wage?

The evidence that does find harm concentrates it on teenagers, young adults, workers without a high-school diploma, workers in low-wage regions, and people trying to enter the labor market for the first time. In Seattle, University of Washington researchers found that experienced low-wage workers tended to gain while entry into low-wage work slowed.

What is the alternative to the minimum wage?

The main alternative is to support low-income workers through the tax system: the Earned Income Tax Credit, or Milton Friedman's broader negative income tax. These raise take-home pay without raising the cost of hiring, target help by household income rather than hourly wage, and spread the cost across taxpayers instead of concentrating it on low-wage employers and their customers.

Is there a good argument for the minimum wage?

Yes. The strongest is monopsony: where employers have power to set wages below the value of what workers produce, a carefully chosen wage floor can raise both pay and employment. Defenders also point to modern studies finding small employment effects and real reductions in poverty. The case against the minimum wage has to answer those findings, not ignore them.

Sources

  • Aaronson, Daniel. "Price Pass-Through and the Minimum Wage." Review of Economics and Statistics, 2001.
  • Aaronson, Daniel, and Brian J. Phelan. "Wage Shocks and the Technological Substitution of Low-Wage Jobs." Economic Journal, 2019.
  • Burkhauser, Richard V., and Joseph J. Sabia. "The Effectiveness of Minimum-Wage Increases in Reducing Poverty: Past, Present, and Future." Contemporary Economic Policy, 2007.
  • Card, David, and Alan B. Krueger. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania." American Economic Review, 1994; and Myth and Measurement: The New Economics of the Minimum Wage (Princeton University Press, 1995).
  • Castillo-Freeman, Alida, and Richard B. Freeman. "When the Minimum Wage Really Bites: The Effect of the U.S.-Level Minimum on Puerto Rico." In Immigration and the Work Force (NBER / University of Chicago Press, 1992).
  • Cengiz, Doruk, Arindrajit Dube, Attila Lindner, and Ben Zipperer. "The Effect of Minimum Wages on Low-Wage Jobs." Quarterly Journal of Economics, 2019.
  • Clemens, Jeffrey, Lisa B. Kahn, and Jonathan Meer. "The Minimum Wage, Fringe Benefits, and Worker Welfare." NBER Working Paper, 2018.
  • Clemens, Jeffrey, and Michael Wither. "The Minimum Wage and the Great Recession: Evidence of Effects on the Employment and Income Trajectories of Low-Skilled Workers." Journal of Public Economics, 2019.
  • Congressional Budget Office. The Effects on Employment and Family Income of Increasing the Federal Minimum Wage, July 2019; and The Budgetary Effects of the Raise the Wage Act of 2021, February 2021.
  • Doucouliagos, Hristos, and T. D. Stanley. "Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis." British Journal of Industrial Relations, 2009.
  • Dube, Arindrajit. "Minimum Wages and the Distribution of Family Incomes." American Economic Journal: Applied Economics, 2019.
  • Eissa, Nada, and Jeffrey B. Liebman. "Labor Supply Response to the Earned Income Tax Credit." Quarterly Journal of Economics, 1996.
  • Friedman, Milton. Capitalism and Freedom (University of Chicago Press, 1962).
  • Harasztosi, Péter, and Attila Lindner. "Who Pays for the Minimum Wage?" American Economic Review, 2019.
  • Jardim, Ekaterina, et al. "Minimum-Wage Increases and Low-Wage Employment: Evidence from Seattle." American Economic Journal: Economic Policy, 2022; and "Minimum Wage Increases and Individual Employment Trajectories," NBER Working Paper, 2018.
  • Lee, David, and Emmanuel Saez. "Optimal Minimum Wage Policy in Competitive Labor Markets." Journal of Public Economics, 2012.
  • Leonard, Thomas C. Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era (Princeton University Press, 2016).
  • Lordan, Grace, and David Neumark. "People versus Machines: The Impact of Minimum Wages on Automatable Jobs." Labour Economics, 2018.
  • MaCurdy, Thomas. "How Effective Is the Minimum Wage at Supporting the Poor?" Journal of Political Economy, 2015.
  • Meer, Jonathan, and Jeremy West. "Effects of the Minimum Wage on Employment Dynamics." Journal of Human Resources, 2016.
  • Neumark, David, and William Wascher. Minimum Wages (MIT Press, 2008).
  • Neumark, David, and Peter Shirley. "Myth or Measurement: What Does the New Minimum Wage Research Say about Minimum Wages and Job Loss in the United States?" Industrial Relations, 2022.
  • Reich, Michael, et al. Studies of Seattle's minimum wage, Center on Wage and Employment Dynamics, University of California, Berkeley, 2017.
  • Rothstein, Jesse. "Is the EITC as Good as an NIT? Conditional Cash Transfers and Tax Incidence." American Economic Journal: Economic Policy, 2010.
  • Sorkin, Isaac. "Are There Long-Run Effects of the Minimum Wage?" Review of Economic Dynamics, 2015.