Putting money back in the pockets of minimum wage workers helped create jobs rather than destroy them, new research has found.
Unions are arguing for workers to get $50 more a week when the Fair Work Commission decides soon how much to increase the minimum wage.
The Reserve Bank of Australia looked at the regular minimum wage rises from 1998 to 2008 and found they had no impact on jobs.
Researcher James Bishop on Wednesday released his study, which showed the small, regular increases were mostly passed on to workers.
“These adjustments appear to have little adverse effect on hours worked or job loss,” Mr Bishop’s report said.
In fact, his study found jobs that had larger wage rises also had larger increases in the number of hours worked.
“I also find that award wage increases do not have a statistically significant effect on the job destruction rate,” Mr Bishop said.
“Again, if anything, the point estimates suggest that the job destruction rate actually declines when the award wage is increased.”
ACTU secretary Sally McManus called on the Fair Work Commission to push the minimum wage up 7.2 per cent when it makes its decision in coming weeks.
“Australia needs a pay rise. Corporations are making record profits while the rest of us continue to struggle,” she said on Wednesday.
From 1998 to 2008, wage rises were handed out to all awards across the board, meaning workers getting the lowest pay got the largest percentage pay rises.
This was a deliberate policy designed to help workers at the lower end more than those in better-paying jobs.
But Mr Bishop said while wage rises encouraged jobs, an unexpectedly large rise could be a tipping point.
“There will always be some point at which a minimum wage adjustment will begin to reduce employment,” he said.