This graph shows Washington State's unemployment rate (from the U.S. Bureau of Labor Statistics). Washington was the first state to index its minimum wage, back in 1998. Surely any economists reading this are shaking their heads. I admit this isn't a perfect way to assess the impact of indexing. But it's sure interesting to look at.
There's something for both sides here.
If you're against indexing, you probably notice that massive surge of unemployment beginning in 2001. And even when you acknowledge that most of that surely represents tech companies going belly-up rather than layoffs at McDonald's, you note that unemployment in Washington is higher now than it was when indexing began.
If you're for indexing, you probably notice how unemployment actually dipped some after indexing first took effect. It's not much higher now than it was in 1998, and in any case it's hard to tell what's due to the minimum wage and what's due to other forces in the labor markets.
It's difficult to find the truth in this debate: Both business and labor have more rigorous economic analyses than this one proving their opposite viewpoints.
My own non-economist's view is that every time the issue of raising the minimum wage comes up, business basically argues that the sky will fall. From looking at Washington, it's difficult to conclude that indexing has been so horrible.
