The pros and cons of a $15 minimum wage
The movement to increase the federal minimum wage is gaining steam. What are the benefits and costs?
The smartest insight and analysis, from all perspectives, rounded up from around the web:
A Congressional Budget Office analysis released last week "makes clear that the benefits of a $15-an-hour minimum wage would heavily outweigh the downside," said Michael Hiltzik at the Los Angeles Times. The agency found that as many as 1.3 million people could be lifted out of poverty if the federal minimum wage rose from $7.25 in stages over five years, boosting the wages of 27 million Americans. The CBO said the change might also lead to the loss of 1.3 million jobs. Opponents have seized on that point, but the agency acknowledges it is "manifestly more uncertain than most of the rest" of the analysis. This uncertainty sounds familiar, said Noah Smith at Bloomberg. Many CBO studies rely on sifting through a large and often contradictory body of research. The most recent studies, however, tend "to find very small job losses from raising pay floors." In many places and industries, companies "hold wages below what a competitive market would offer." A higher minimum could just restore the competitive balance between workers and employers.
Tell that to the small businesses that are particularly vulnerable to cost increases, said Tiana Lowe in the Washington Examiner. Big businesses, meanwhile, will simply automate the jobs. "Just go to your local McDonald's and order from the kiosk to see this in action." Some companies in places that have raised the minimum wage are already blaming wage laws for driving them out of business, said Jeremy Hill at Bloomberg. Restaurants Unlimited, a West Coast chain of 35 fine-dining and casual eateries, filed for bankruptcy protection last week. It said "progressive wage laws" in Seattle, San Francisco, and Portland had inflated "wage expenses by a total of $10.6 million" — more than the midsize chain, with total revenue of $176 million in a year, could afford.
Don't base your opinion on one example, said economists Anna Godoey and Michael Reich at CNN. We've done the research on 51 minimum-wage increases in 45 states and found that "higher minimum wages do not have adverse effects on employment." We also found that in low-wage areas "where the highest proportion of workers received pay increases," there were wage increases across the board. That matches other research that "wage increases ripple upward," said Andrew Van Dam at The Washington Post. As much as "about 40 percent of wage benefits go to workers who aren't directly affected" by the law. And there are other surprising benefits: "Raising the minimum wage by 10 percent could reduce suicides by 3.6 percent among adults with a high school degree." Another bonus: Higher minimum wages have even been shown to cut crime, by making ex-convicts less likely to return to their old ways.