Economics

A Flawed Minimum Wage Study Shows How Bad Stats Get Turned Into Policy Gospel

A 2024 paper claimed higher minimum wages don't kill jobs. It was statistically significant—and almost certainly misleading.

Aaron Brown | 5.27.2026 12:00 PM

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(Illustration: Adani Samat Photo: Envato)

The minimum wage is on the rise in the U.S. Thirty states, the District of Columbia, and at least 68 localities have set hourly compensation above the federal floor of $7.25. New York City, Long Island, and Westchester are at $17. In California, fast-food establishments are required to pay their workers $20 per hour.

Advocates for these laws point to academic studies that claim higher minimum wages don't cost jobs. Many of them use statistical techniques that generate misleading results or are misinterpreted by the media. A 2024 paper published in The Review of Economic Studies titled "Minimum Wage Employment Effects and Labor Market Concentration" didn't get as much press attention as some studies in this canon, but the paper is still worth examining because its statistical missteps are typical of academic research published in prestige journals.

Wrong Number with Aaron Brown debunks the studies behind the biggest claims in academics and mainstream media. Don’t miss the latest videos and articles from Brown and Reason.

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Co-authored by five economists, the paper found that minimum wage increases haven't led to job losses at big-box stores, concluding that these "monopsonistic" establishments therefore must systematically underpay their workers. The University of Pennsylvania, where one of the co-authors works, promoted the study in an article titled, "Increasing minimum wage has positive effects on employment."

The authors reached their conclusion by dividing American counties into those with retail sectors dominated by a few large employers (call these "the Big-Box counties") and those with more diverse retail employers ("the Mom-and-Pop counties"). Next, they looked at how employment of store clerks, order fillers, retail salespeople, and cashiers in the general merchandise sector responded to minimum wage increases relative to overall county employment.

They found that in Big-Box counties, a 10 percent higher minimum wage was associated with 1.12 percentage points lower job losses among store clerks than among county workers overall. In Mom-and-Pop counties, the same wage increase........

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