$15 Minimum Wage Will Not Make Everything Suddenly Unaffordable
Joe Biden has proposed a $15 min wage, and conservatives are losing their minds.
Despite countless economists, studies, and real-world examples showing the economic benefits of raising wages, conservatives have completely melted down over Joe Biden’s proposed $15 minimum wage.
But the evidence is clear; raising the minimum wage will not significantly impact the prices of goods and services and provide millions with much needed higher wages. Here’s why.
The Economic Policy Institute has provided a list of economists who support increasing the minimum wage to $15 per hour. The statement — provided with the list — states:
Today, workers who earn the federal minimum wage make $7.25 an hour — about 29 percent less per hour than their counterparts made 50 years ago (after adjusting for inflation). We can afford to pay the lowest-paid workers in America substantially more than what their counterparts were paid a half century ago. Workers produce more today from each hour of work, with productivity nearly doubling since the late 1960s.
We, the undersigned, support gradually increasing the minimum wage to $15 by 2024, and then indexing it to median wages to protect against future erosion. We also support gradually phasing out the outdated subminimum wage for tipped workers, which has been frozen at $2.13 since 1991.
The full list of signatories and the entire statement outlining the policy’s benefits can be found here. During the same period, the gap between the richest and poorest Americans became larger than ever. If worker pay had kept with productivity gains since 1968, today’s minimum wage would be $24 per hour. There is absolutely no reason to believe that businesses can’t afford to pay higher wages. They used to do it!
Many conservatives claim that the policy would negatively affect the job market. In a review of 37 studies and 739 estimates since 2001, minimal impact on employment was found. The study concluded:
We find a moderate degree of publication bias in this literature, but no support for the proposition that the minimum wage has had an important effect on U.S. employment.
Another claim is that because there is a $15 minimum wage, a Big Mac would suddenly cost $20. This is just not true. While it is true that the costs of goods are affected by higher wages, it’s nothing to be worried about. One study finds that every 10% increase to the minimum wage would only cause a 0.3%-0.8% increase the restaurant industry's prices.
What this claim also fails to take into account is the consumer side of the equation. Low-income workers are more likely to spend their increased disposable income. An increase in wages means consumers are more likely to go out to eat, more likely to buy that outfit they saw, more likely to get their car maintenance, and countless other expenses. In the end, increased wages stimulate consumer demand, business activity, and job growth. Other benefits of raising the minimum wage include reducing crime, decreases in infant mortality, improved children’s health, and reduced racial inequality.
Seattle passed a $15 minimum back in 2014. While not everything has been perfect, employed workers have seen overall benefits. Workers on the low end of the pay scale saw a significant increase in wages. Those working more hours saw most of the benefits while those who worked less had their hours reduced. Those with reduced hours received enough of a pay increase and did not see a significant income change. Critics may claim that it made it harder for less experienced workers to have a more difficult time entering the workforce. A counter-argument is this is not an issue of higher wages but a lack of jobs that can be addressed with a separate policy.
The overall benefits of a $15 minimum outweigh the negatives. No policy is perfect so pointing outs the downsides is not a reason not to do them. Conservatives like to overdramatize the downsides. At the end of the day, workers will see higher wages for low-income workers, and business owners may have to play around with their payroll. A separate policy that encourages job creation to go along with the minimum wage increase would also go a long way. While having a few minor valid criticisms, most conservative talking points about the $15 minimum wage increase should not be taken seriously and only serve to keep millions of people impoverished to the benefit of large corporate interests.
