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Feb 27, 2021 · So what happened, and is this game over for the $15 minimum wage? What happened?. The idea of pushing up the minimum wage in stages to $15 in 2025 was included in Joe Biden’s $1.9tn stimulus ...
Jan 30, 2021 · They know that raising the minimum wage offers business a number of benefits. First, employees who are paid a higher wage tend to be more productive due to morale improvements, better health, less absenteeism and reduced “decision fatigue.” The Center for American Progress also found that raising the minimum wage causes reduced employee …
Feb 21, 2021 · But both versions of passing the increase would see the minimum wage get to $15 only gradually, after several years. Under the Raise the Wage Act of 2021, the minimum wage would gradually increase ...
Mar 03, 2021 · “The CBO study does confirm that a $15 minimum wage in 2025 would raise the wages of 27 million workers, reduce the number of people in poverty by nearly 1 million, and help to reverse growing ...
Minimum Wage Pros | Minimum Wage Cons |
---|---|
Less government support necessary | Higher labor costs for companies |
Higher motivation of workers | Loss of competitiveness |
Better working quality | Replacement of workers with machines |
Better chances to get out of poverty | Higher unemployment |
Second, the worker-productivity benefits center mostly around a given business and the wages it pays its customers. However, business owners also have reason to advocate for a minimum wage increase across the entire market. Consumers who suddenly earn more also spend more, driving up proceeds for businesses. This assertion makes logical sense: people living below or close to the poverty line frequently forgo products they wish they could afford, but with more income, they will likely purchase those products. In practice, past minimum wage increases have indeed resulted in a boost in consumer spending. A minimum wage increase to $5.85 per hour in 2007 generated an additional 1.7 billion dollars in consumer spending and a minimum wage increase in 2008 to $6.55 per hour generated an additional 3.1 billion dollars in consumer spending.
Opponents of raising the minimum wage argue that most minimum wage workers are teens working their first jobs, that raising the minimum wage will kill businesses or jobs or that raising the minimum wage will have no effect at all on purchasing power because of the resulting increase in inflation. However, the arguments against raising the minimum wage range from disingenuous to objectively false. It’s time to raise the minimum wage.
Second, children disproportionately benefit from increasing the minimum wage. Across the United States, 28.2% of children have a parent affected by increasing the federal minimum wage to $9.80, and even more have a parent who would be affected by a higher minimum wage hike. In 2017, a study conducted by the School of Public Policy at Georgia Institute of Technology found that a minimum wage increase of just $1 would reduce reports of child neglect by 9.6%. “Money matters,” said Lindsey Rose Bullinger, co-author of the study, “when caregivers have a more disposable income, they’re better able to provide a child’s basic needs such as clothing, food, medical care, and a safe home. Policies that increase the income of the working poor can improve children’s welfare, especially younger children, quite substantially.” Bullinger’s study did not have enough data to determine if an even higher minimum wage would result in even fewer cases of child neglect, but Bullinger noted, “our findings point in that direction.” Infants also benefit from increasing the minimum wage: the American Journal of Public Health estimated that between 2,800 and 5,500 premature deaths in New York City alone could have been prevented if the minimum wage was $15 an hour rather than $7 an hour. That figure constitutes approximately 8.33% of all of the premature deaths in New York City.
As of 2020, the federally mandated minimum wage of $7.25 for non-exempt workers is not enough to lift a family of two above the poverty line. The slow growth of wages in comparison to productivity is not universal: ...
First, workers who are affected by a minimum wage increase see immediate and significant health benefits for themselves and for society . A study conducted in 2011 found that blue-collar workers in states with higher minimum wage rates are much less likely to have untreated medical needs, as they are better able to afford care. Particularly in a country prone to global pandemics, an individual’s health can quickly become a community’s health: workers who leave illnesses untreated put everyone around them at risk. Additionally, an increased minimum wage corresponds to a lower smoking rate. Low-income workers currently make up 75 percent of smokers, but reducing the stress of poverty allows them to quit. Other studies have found that a higher minimum wage correlates with fewer teen pregnancies and less teenage alcohol consumption.
For comparison, productivity since 1973 has increased 74.4 percent, while average hourly compensation has increased just 9.2 percent. As of 2020, the federally mandated minimum wage of $7.25 for non-exempt workers is not enough to lift a family of two above the poverty line.
The second assumption — that wage employers pay the equilibrium wage — ignores the existence of “labor monopsonies.”. A “monopsony” is a market with only one buyer — in terms of employers, it is a market with only one (or very few) employers.
The gradual increase would help businesses and lower-wage areas adjust to a higher minimum.
But both versions of passing the increase would see the minimum wage get to $15 only gradually, after several years. Under the Raise the Wage Act of 2021, the minimum wage would gradually increase to $15 until 2025. Then it would be indexed to median wage growth.
However, that's not the case in many states. Currently, 16 states have the same minimum wage as the federal rate of $7.25, and five default to the federal minimum. That means just 29 states have rates above the federal minimum.
Currently, there's two possible routes for Democrats to pass the wage hike: as a standalone bill or through reconciliation. Sen. Bernie Sanders (I-Vt.) has indicated that reconciliation — where the bill could pass with only Democrats' votes in the Senate — is his preferred route.
Note: Data is not adjusted for inflation. Beginning in 2026, the minimum wage would be indexed to the median wage under the Raise the Wage Act.
Ben Zipperer, an economist at the Economic Policy Institute (EPI), said that $15 in 2025 would be an "appropriate" level since it would put a dent in "poverty wages."
Researcher Yannet Lathrop of the National Employment Law Project previously told Insider that a gradual increase makes sense, as in some states a $15 minimum wage is more than double the current rate. She said that, if their minimums were closer to $15, it would make sense to do the increase in one or two steps.
Here are six simple reasons why raising the minimum wage makes sense. 1. It is long overdue. Since it was last raised in 2009, the minimum wage has failed to keep up with inflation, failed to keep up with average wages, and—most dramatically—failed to keep up with incomes of the top 1 percent and CEOs, contributing to America’s growing inequality ...
A 2019 Oxfam report shows that raising the minimum wage to $15/hr would benefit 40 million workers and their families. (Photo by: Jeffrey Greenberg/UIG via Getty Images)
We need to get our economy moving, prioritizing workers and families most impacted by the pandemic, specifically women and people of color. After more than a decade of hard work, low-wage workers deserve a bump to get them and their families out of poverty.
Vast majorities (up to three quarters, including a majority across party lines) support raising the wage. In fact, over half the states have raised their minimum wages to restore basic fairness to the workforce.
When employers don’t pay people enough to survive, those workers are compelled to seek government assistance, meaning taxpayers are essentially subsidizing the corporations.
The average CEO at one of the top 350 firms in the US made $21.3 million in 2019, 320 times as much as the typical worker; a minimum wage worker still makes $15,080: a gap of 1,400 to 1. 2.
In one recent poll, 67 percent of small business owners support the minimum wage increase to $15 an hour. They say it would spark consumer demand, which would enable them to retain or hire new employees. And raising the wage doesn’t seem to compel employers to cut jobs.
However, for the bottom 20% of wage earners, a 10% increase in the minimum wage could increase wages up to 2.9%. “Minimum wages, then, are an important piece of the policy toolkit affecting wage inequality and boosting stagnant wages at the bottom of the wage ladder,” Zipperer wrote.
Around the same time, those in opposition to a $15 minimum wage — including Congressional Republicans — celebrated when the Senate parliamentarian ruled that Democrats couldn't include the measure in the upcoming budget reconciliation.
Even putting the arbitrary distinction between "skilled" and "unskilled" labor aside, Zipperer explained that a higher minimum wage would not only benefit workers earning below $15 an hour; it would also boost those working at slightly above the new federal minimum wage — say, at $16 or $17 an hour.
A new analysis by the Congressional Budget Office, for example, estimates that a $15 an hour minimum wage would cause 1.4 million job losses. While Zipperer believes that the study is too pessimistic, he says that even taking all of its numbers as a given proves the overall merits of a wage hike.
In arguments against the wage hike, some people refer to low-wage work with derision, turning the very act of "flipping burgers" into an insult. Others, like Schroeder, are determined to debunk the range of assumptions that create this mentality.
Largely contributing to the gender and racial pay gaps, 59% of people earning below $15 an hour are women, and almost 1 in 4 of those women are Black or Latina.
Research has found that restaurants use small price increases as an adjustment to increased labor costs.
A report last year by the Congressional Budget Office found that a $15 minimum wage would increase the income of 27 million workers, 17 million of whom currently earn below that amount with the remaining 10 million earning just over $15 an hour, but all of whom would see their wages rise due to what economists call the “spillover effect.”.
The Democratic Party made a $15 minimum wage part of its platform ahead of the 2016 election season. A handful of states with high costs of living — California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey and New York — as well as some cities have adopted laws that will raise the minimum wage to $15 over time, ...
A $15 wage would lift 1.3 million households above the poverty line — but the flip side could be fewer jobs. The CBO estimated a median loss of 1.3 million jobs, although it also acknowledged considerable ambiguity with that figure. “Findings in the research literature about how changes in the federal minimum wage affect employment vary widely,” the agency said.
Other data suggests that higher pay improves worker satisfaction and leads to lower turnover, which can help mitigate employers’ higher payroll costs. According to Glassdoor, a 10 percent increase in base pay is associated with a 1.5-percentage-point increase in the likelihood that workers will remain with their current employer, which can translate to significant cost savings for companies. Replacing a low-wage worker costs about 16 percent of that worker’s annual salary.
In terms of reducing income and wealth disparities, a rising minimum wage is a good thing. “The benefits in terms of reducing inequality — getting money into people's pockets, stimulating the market — are very well proven,” said Till von Wachter, professor of economics and director of the California Policy Lab at the University of California, Los Angeles.
Establishing a $15 wage floor has been a long-term goal of union-backed advocacy groups, which began putting pressure on big companies like McDonald’s and Walmart to pay workers $15 an hour in 2012. The Democratic Party made a $15 minimum wage part of its platform ahead of the 2016 election season.
Business groups have argued that raising the minimum wage forces business owners to fire workers, a claim echoed by Trump in the debate. The reality is more complex: The evidence of job loss is inconsistent, and the benefits are accrued by some of the country’s most vulnerable populations.
Raising the minimum wage could help minimum wage workers be able to afford basic food products so that they are not required to rely on government assisted food programs.
Raising the minimum wage will help alleviate this income inequality by making it easier for people to live fuller lives on the minimum wage. The minimum wage workers of America are important. The federal government can show them that by putting their needs above the needs of the CEOs and raising the minimum wage.
Raising the minimum wage to $10.10 would help 27 million workers bring home an extra $35 billion annually.
Raising the minimum wage would save the government money because a raise to $10.10 would take 1.7 million people off of various types of public assistance. For example, the higher minimum wage would result in a less expensive food stamp program.
If the government chose to raise the federal minimum wage to $10.10 per hour, the raise would result in the reduction 7.5 percent to 8.7 percent of current food stamp enrollments. This means that between 3.1 and 3.6 million people could afford their food on their own.
Some retailers have started to provide higher wages for workers because they know better wages attract better talent.
The minimum wage is a point of contention for almost all Americans. The people who make minimum wage insist that it is not enough to live on, and they simply cannot comfortably buy all of the basic necessities required for normal life including food, housing and insurance when they make less than $10 an hour.
Research can be found both supporting the economic impact of minimum wage increases and citing it as a cause for higher prices and lower employment. Some standard arguments in favor of a higher minimum wage include: 1 A better standard of living for entry-level employees: Lower wages require entry-level employees to work more than one job, leaving them with little free time and higher levels of stress. 2 Reducing reliance on public assistance: Walmart, in particular, is a common target for critics who argue that its low-paid workers cost the public money because of their reliance on public assistance to subsidize their low incomes. This claim comes from a 2013 study by a group called Americans for Tax Fairness that claimed Walmart costs taxpayers $6.2 billion annually in food stamps, Medicaid, and subsidized housing. 8 Other studies have refuted this claim. 3 Putting money back into the economy: The more money entry-level employees have, the more they will spend, which is good for the economy.
A prominent example in 2018 was Amazon's decision to raise its minimum rate of pay for U.S. workers to $15 per hour. 6 Amazon's move was controversial because it also involved reducing stock options available to some employees, but it's still one of the most prominent examples of a company boosting its minimum pay.
However, 29 states have a minimum wage higher than the federal rate, and employees always must be paid the highest of conflicting rates, whether they are based on federal, state, or local laws. The federal minimum wage always requires nonexempt employees to be paid 150% of the regular pay rate for any hours beyond 40 worked during the same week.
The federal minimum wage for tipped workers is $2.13 per hour, but such employees still must earn at least $7.25 per hour (or the applicable state or local rate) in total wages once tips have been included. Some states also have a minimum rate higher than $2.13. 2 .
Reducing reliance on public assistance: Walmart, in particular, is a common target for critics who argue that its low-paid workers cost the public money because of their reliance on public assistance to subsidize their low incomes.
About 200 fast-food workers walked off the job in New York in November of 2012 in an attempt to boost wages to $15 per hour, among other demands . The following year, more walkouts took place in other cities, and a national walk-out was held less than a year after the initial protest in New York.
California will be at $15 for all nonexempt employees by January 1, 2023. 3 New York's law is more complex, increasing the minimum wage at different paces depending on where in the state employers are located. 4
Raising the minimum wage to $15 will be particularly significant for workers of color and would help narrow the racial pay gap. Nearly one-third (31%) of African Americans and one-quarter (26%) of Latinos would get a raise if the federal minimum wage were increased to $15. 6. Almost one in four (23%) of those who would benefit is a Black ...
After the federal minimum wage was raised to its highest historical peak in 1968, wages grew and racial earnings gaps closed without constricting employment opportunities for underpaid workers overall. 54
A $15 minimum wage would begin to reverse decades of growing pay inequality between the most underpaid workers and workers receiving close to the median wage, particularly along gender and racial lines .
A $15 minimum wage by 2025 would generate $107 billion in higher wages for workers and would also benefit communities across the country. Because underpaid workers spend much of their extra earnings, this injection of wages will help stimulate the economy and spur greater business activity and job growth.
The Raise the Wage Act follows the lead of the growing number of states and cities that have adopted significant minimum wage increases in recent years, thanks to the ‘Fight for $15 and a union’ movement led by Black workers and workers of color.
Gradually raising the federal minimum wage to $15 by 2025 would lift pay for 32 million workers—21% of the U.S. workforce.
In states that have already approved $15 minimum wages, business organizations representing thousands of small businesses have endorsed a $15 minimum wage.
Other people will say something like, “Well, the federal minimum wage of $2.90 in 1979 would be equivalent to $10.47 per hour when adjusted for inflation.
Yeah, that’s absolutely right. And in some ways, when we talk about this as economists or econometricians, it starts to sound quite complicated. But if you just think about it from the perspective of a business owner, I think it actually gets pretty simple. The business owners are asking, “What are going to be the total costs associated with hiring a particular worker?” That’s a dynamic question that involves the expected duration of that employment relationship. They’ll be wondering if bringing that worker on will generate more revenue than it costs.
If we take, for example, the studies that have been conducted to analyze the increases that were enacted by the city of Seattle — very large minimum wage increases that went into effect in the middle of the decade — one of the interesting dimensions of the results is that impacts did seem to show up primarily on the hours margin, as opposed to showing up on the number-of-jobs margin. And there was pretty modest evidence of declines in hours or loss of jobs for individuals who had been employed in their current jobs for a period of time and had built up some experience and know-how on the job with their current employers. Instead, most of the negative impacts were showing up for individuals who either had just recently started their relatively low-wage jobs, or who hadn’t yet had the opportunity to find a low-wage job within the Seattle labor market. I think that type of nuanced results is popping up in a variety of contexts in which the minimum wage is being studied.
In terms of thinking about the minimum wage workforce, it’s diverse in a variety of ways. But relative to the workforce as a whole, it’s disproportionately consisting of teenagers, individuals with relatively low levels of education, and individuals with low levels of job market experience.
And I mean, the pandemic labor market is certainly complicated, in that one can tell all manner of supply- and demand-side stories for why firms may or may not be willing to pay wages of a particular level and why workers may or may not be willing to take jobs that pay wages that they perhaps previously would have taken. There are a lot of issues at play.
Today, you have a non-trivial number of economists who think that the effects of modestly sized minimum wage increases on unemployment are null, if not slightly positive. And some economists are even more bullish on the prospects for very large increases of the minimum wage having modest impacts on employment. But at the same time, there are also many economists who continue to worry greatly about the employment effects of a minimum wage as high as, say, $15 in states like Alabama and Mississippi. And a sizable fraction of the research that’s being done on the effects of minimum wages does, in fact, continue to find employment impacts — sometimes small, sometimes non-trivial in magnitude, in ways that can vary meaningfully with the economic circumstances in which those minimum wage increases are enacted.