Moderate increases have shown little to no employment loss in the best studies; the textbook prediction is not automatic.
What the evidence shows
The simple supply-and-demand model predicts that a wage floor above the market rate reduces employment. Card & Krueger (1994) tested this with a natural experiment — New Jersey raised its minimum wage while neighbouring Pennsylvania did not — and found no drop in fast-food employment in New Jersey; if anything, it rose slightly. The study helped earn Card a share of the 2021 Nobel Prize and reshaped the field.
Decades of research since are genuinely mixed, but the most careful recent work supports the Card–Krueger picture for moderate increases. Cengiz et al. (2019) studied 138 U.S. state minimum-wage changes and found that jobs paying below the new minimum disappeared, but almost exactly as many appeared just above it — leaving total low-wage employment essentially unchanged. The claim that raising the minimum wage 'always' destroys jobs is not supported; the effect depends on how large the increase is relative to local wages.
Sources
Card, D., & Krueger, A. B. (1994). Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania.
American Economic Review, 84(4), 772–793
After New Jersey raised its minimum wage, fast-food employment did not fall relative to Pennsylvania — contradicting the simple textbook prediction.
Source →Cengiz, D., Dube, A., Lindner, A., & Zipperer, B. (2019). The Effect of Minimum Wages on Low-Wage Jobs.
The Quarterly Journal of Economics, 134(3), 1405–1454
Across 138 state minimum-wage rises, jobs below the new minimum vanished but nearly equal numbers appeared just above it; total low-wage employment was roughly unchanged.
DOI: 10.1093/qje/qjz014 →