Obama Praises the Higher Minimum Wages in Four Underperforming States

March 5th, 2014 11:59 PM

Early Wednesday morning, Josh Lederman at the Associated Press, aka the Administration's Press, opened a report on President Barack Obama's upcoming afternoon trip to Connecticut by writing that "Obama wants the U.S. to follow Connecticut's lead by raising the minimum wage." In a dispatch after Obama's speech in New Britain, Lederman wrote of "a show of support from like-minded governors," including those from the Nutmeg State, Massachusetts, Vermont and Rhode Island, all of which have minimum wages higher than the federally mandated rate of $7.25 per hour.

Correlation doesn't necessarily mean causation, but the four states Obama highlighted as examples to follow have economic performances ranging from mediocre to horrid during the past several years arguably tie to poor policy choices like high minimum wages — something Lederman should have noticed and didn't.

I'll cite just three recent sets of statistics.


For example, the latest GDP growth by state report from the Bureau of Labor Statistics for the year 2012 shows the following growth rates for the U.S. and the four states involved —

- U.S.: +2.5 percent
- Connecticut: -0.1 percent
- Massachusetts: +2.2 percent
- Rhode Island: +1.4 percent
- Vermont: +1.2 percent

On the unemployment front, a BLS report released last week showed the following average unemployment rates for 2012 and 2013 in the U.S. and the same four states:

- U.S.: 8.1 percent and 7.4 percent
- Connecticut: 8.3 percent and 7.8 percent
- Massachusetts: 6.8 percent and 7.1 percent (one of a very few states showing an increase in 2013)
- Rhode Island: 10.3 percent and 9.5 percent (among the three worst in the nation in both years)
- Vermont: 4.9 percent and 4.4 percent

Here are the results for payroll job growth in 2013 (Table 5 at link) —

- U.S.: 2,322,000 jobs added, an employment increase of 1.72 percent
- Connecticut: 11,500 jobs added, an employment increase of 0.70 percent
- Massachusetts: 55,500 jobs added, an employment increase of 1.68 percent
- Rhode Island: 3,600 jobs added, an employment increase of 0.77 percent
- Vermont: 3,000 jobs added, an employment increase of 0.98 percent

These four states have really served as laboratories validating the Congressional Budget Office's contention that Obama's proposed minimum wage hikes will lead to either slower or much slower job growth. Minimum wage hikes also seem to be associated with slower overall economic growth. Both are hardly things residents of other states would like to see happen where they live. Both are things the AP's Lederman should have observed.

Also keep in mind that the minimum wages in these four states are far from the $10.10 federal minimum Obama wants to see ($8.70 in CT,  $8.00 in MA, $8.00 in RI, and $8.73 in VT). Imagine the damage a nationwide rate of $10.10 an hour could do.

Cross-posted at BizzyBlog.com.