Myths vs. facts about the minimum wage

An FAQ on the economics of increasing wage floors

Report • By Sebastian Martinez Hickey • June 1, 2026

For nearly 90 years, the minimum wage has been one of the core labor standards shaping job quality for workers in the United States. Since the 1938 enactment of the federal minimum wage as a core pillar of the Fair Labor Standards Act (FLSA), policymakers in Congress and later in dozens of states, cities, and counties, have adopted hundreds of minimum wage policies—setting wage floors across and within industries, at varying levels of geography (national, state, and local), and applying in different ways to different groups of workers and employers. This abundance of experience across a wide range of jurisdictions and industries has provided ample opportunity to understand how minimum wage policies—and the failure to adjust them—affect workers, employers, and the economy. Debates surrounding the minimum wage have also generated consistent and pervasive myths about the policy. These are the facts:

Does raising the minimum wage increase unemployment?

In brief: No. High-quality economic research finds increasing the minimum wage does not significantly impact employment.

In detail: The 90% of high-quality economic studies show that increasing the minimum wage boosts wages for low-wage workers without meaningfully increasing unemployment. These studies use statistical tools and empirical methods to measure what happens to workers before and after a minimum wage increase, controlling for other factors that can impact employment. The consistency of these findings across time, place, and level of increase is powerful evidence that increasing the minimum wage creates a healthier low-wage labor market.

An increase in the minimum wage raises the cost of labor for businesses by definition, but the economy can absorb these changes through channels of adjustment including decreased turnover, modest price increases (see Question 2), lower profits, and the reallocation of workers to more productive firms. Even if a minimum wage increase leads businesses to adjust their staffing levels, what workers are likely to experience are decreases in hours worked or increased time between jobs, not categorical unemployment. Higher hourly earnings can more than offset these reductions, leaving many workers with greater total income even if they are working fewer hours.

https://www.epi.org/publication/myths-vs-facts-about-the-minimum-wage-an-faq-on-the-economics-of-increasing-wage-floors/