Rising minimum wage could mean problems
The Democratic-controlled U.S. House of Representatives wants a $15 minimum wage from coast to coast. The truth is that minimum wages are rising across the country even without congressional action.
The National Employment Law Project notes that the minimum wage in more than 20 states and 26 counties and cities increased on Jan. 1. The moves affect more than half of the U.S. population.
Of those locales that increased their minimum wage with this new year, 17 meet or exceed $15 per hour, which is the figure sought by the “Fight for $15” movement begun in recent years and embraced by many progressive groups and Democratic politicians.
“Local communities all around the country strongly support raising the minimum wage, because people see their friends, neighbors or themselves working hard but not getting ahead,” says Yannet Lathrop, a policy analyst with NELP.
Actually, not all local communities strongly support this effort. It certainly hasn’t taken hold across Oklahoma, where folks seem to understand that significantly driving up the minimum wage, which today stands at $7.50 per hour, can drive some people out of business and hurt those who most benefit from it — entry-level workers. Only 2.1% of all hourly workers made the federal minimum wage in 2018.
A Congressional Budget Office report issued this past summer said a $15 minimum wage would help 17 million U.S. workers. Less frequently mentioned by proponents of doubling the federal minimum wage, however, was the CBO noting that 3 million or more Americans could lose their jobs due to the increase.
This has happened in places that have approved minimum wages of $15 per hour and higher. If wages go up but revenue remains unchanged, something has to give.
One example is Seattle, whose minimum wage rose to $16.39 per hour on Jan. 1 — a 73% increase since 2015. Washington state is among the states where tips are not considered earned income, which means restaurants must pay wait staff minimum wage plus tips.
Simone Barron, a restaurant worker and co-founder of the Full Workers Service Alliance, wrote recently in The Wall Street Journal about two well-regarded Seattle restaurants that closed after being squeezed by rising labor costs and rising rents.
“As a worker, you’re attracted to (the restaurants’ owners) because they offer job security and you know you’ll make money,” Barron wrote. “That’s no longer the case here with a high minimum wage that ignores tip income. …
“I’m proudly progressive in my politics, but my experience shows that progressives should reconsider minimum-wage laws that hurt the very workers they’re trying to protect.”
It’s good advice, but unfortunately, it’s likely to be ignored by politicians who prefer talking points over reality.