$15 Minimum Wage: Job Killer or Path Out of Poverty?

This Real News Network segment sets forth the most common arguments against increasing the minimum wage to $15 an hour, or alternatively, a living wage level, and shows why they don’t hold up to scrutiny. A decent minimum wage is even more important when the supposedly robust US economy is increasingly creating McJobs.

JAISAL NOOR: Maryland’s Republican governor Larry Hogan touts his ability to work across the aisle, but a brewing debate over raising the minimum wage could put him at odds with Democrats.

LARRY HOGAN: We have to continue to help people grow out of poverty. But that’s a different issue than minimum wage, which is supposed to be your first job entering the market. You’re not supposed to be able to support a family on minimum wage.

JAISAL NOOR: Maryland raised its minimum wage to $10.10 an hour last July. Of the state’s over half a million low-wage workers, 9 in 10 are over the age of 20, and about a third have children. That’s why polls show broad support for a $15 minimum wage. But Governor Hogan has his concerns.

LARRY HOGAN: We will be more than twice as high as Virginia. That is $7.25. Now, does that put us in a competitive position? Do companies say, I’m going to start up and try to hire 100 new young people in these entry jobs. Am I going to do it in Maryland, or am I going to do it in Virginia? So I think we need to have the discussion. There have been some reports that say we could lose as many as 100,000 jobs.

JAISAL NOOR: The NFIB, or National Federation of Independent Business, predicts 100,000 jobs could be lost over the next decade if Maryland adopts a higher minimum wage. Higher labor costs would force employers to lay off tens of thousands of workers, including over 13,000 in the fast food sector alone, along with $61 billion in lost output over the next decade.

The minimum wage has remained largely stagnant for half a century. When cities and states have raised it, peer-reviewed studies have found they did not cause job losses, argues economist David Cooper of the nonpartisan Economic Policy Institute. There has been an enormous body of research on the effect of the minimum wage on employment, particularly since the mid-1990s, including recently by the Census Bureau, which has largely concluded that raising the minimum wage does exactly what it’s supposed to do. Raising the pay of low-wage workers with little impact on their employment.

But in response, the NFIB’s Susan Stoltenberg argues the burden will fall on small business. If they can’t raise prices because consumers won’t pay more in the marketplace, they have no option but to cut hours or eliminate entry level jobs. But Cooper disagrees, arguing even if there were cases where a minimum wage increase slowed the rate of job growth or led to a small reduction in workers’ hours, the fact that workers were making higher hourly wages meant their take home pay at the end of the year was the same if not greater than before, reducing the share of families in poverty.

Seattle was the first city to adopt a $15 minimum wage. Groups like the NFIB warned about job losses. Stoltenberg cites an October study: While some more experienced workers saw wage gains, less experienced workers saw no gain in pay, and significant reduction in the rate of new entries in the workforce.

Cooper argues the term ‘experienced’ is being mischaracterized. It doesn’t refer to skill or tenure. Instead it’s referencing workers who already worked fewer hours in the 12 months before the increase. He says the study is making his exact point: Most workers saw clear wage gains. Some ended up with the same amount of income for fewer hours of work.

A recent Bloomberg piece about Seattle shows that employment in food service has actually increased since the minimum wage became $15 an hour in the beginning of 2018. And the first study to examine the impacts of raising wages over $10 an hour in six cities found more money going to low-wage workers and no significant job loss. Economists have found raising the minimum wage would have other benefits, as well: Raising job retention, economic stimulus with more people having money to spend, and reducing the number of working people relying on government assistance. And a growing number of small business owners say they want a higher minimum wage.

JACQ JONES: It is in the best interests of any business to ensure that their employees are able to meet their own basic needs. This is also a matter of ethics for me. I may be old fashioned, but I believe that I should not be relying on government subsidies to stay in business. If I am paying my employees at a level where they are relying on food stamps to eat and Section 8 for housing, the government is picking up the tab on my substandard wages. That’s not an ethical business; that’s stealing from the taxpayers.

JAISAL NOOR: The NFIB describes itself as the voice of small business, but questions have been raised about whose interests they serve. As CNN reported, top donors have included the Koch brothers, whose donor network push an agenda that benefits big business; a claim the NFIB vehemently denies. For their part, Democrats in Maryland are holding a press conference Monday to announce a push for a $15 minimum wage by 2023 starting this year.

For The Real News, this is Jaisal Noor reporting in Annapolis, Maryland.

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26 comments

  1. RopeADope

    I really wish Sanders would expand the minimum wage discussion to offshore capital. The minimum wage is purposefully suppressed within the US so that offshore tax evading capital can play games in the financial markets. These financial bubbles are occurring at a more frequent and violent pace because since 1982 the periods of wage suppression have become longer and longer.

    Reply
  2. Steve H.

    > It is in the best interests of any business to ensure that their employees are able to meet their own basic needs.

    Two eateries in town got shut down for Hepatitis A in the last two weeks. Free vaccinations offered, yay.

    Can’t help but think, all the ways to avoid having active needle sharers handling food. Mostly boiling down to less despair.

    BTW, how’s the CDC doing with the shutdown?

    Reply
    1. Arizona Slim

      That hits close to home.

      I know a local lady who contracted Hepatitis A back in October. And she was hospitalized and told she needed a liver transplant. The transplant was done at the Mayo Clinic in Scottsdale.

      Alas, this lady died of a heart attack on December 26.

      Reply
  3. Mark Oglesby

    The more money that’s in the hands of workers, the more money that’s being spent in the community! Higher wages in fact benefit small businesses by the very fact that more money’s flowing through the economy!

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  4. John A

    There’s never any talk of executive pay affecting a company’s ‘competitiveness’ in mr market. Ocado, a grocery home delivery service in Britain, that floated a couple of years ago, is now paying its chief exec a £23 million bonus as the share price has reached a certain target. I suspect a very high proportion of the workforce, from packers to delivery drivers earn around about the minimum wage or just above and have far more need of a pay rise than the already extremely well remunerated CEO.

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    1. Robert McGregor

      Perfect example! Pretty easy to understand. Which do you think would help the economy more? Ocado having $23m, most of in financial and real estate assets, or him having maybe $1m, and the other $22m circulating between the deliverers’ pockets and the small businesses in their communities?

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      1. Anarcissie

        I have to suspect that most of that $23m is funny money. If so, I would think if it entered the real economy, where there is still some correspondence between labor, money, goods, and services, it would cause a lot of inflation. The money does not represent labor, the source of actual wealth, either coming or going.

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  5. cnchal

    LARRY HOGAN: We will be more than twice as high as Virginia. That is $7.25. Now, does that put us in a competitive position? Do companies say, I’m going to start up and try to hire 100 new young people in these entry jobs. Am I going to do it in Maryland, or am I going to do it in Virginia? So I think we need to have the discussion. There have been some reports that say we could lose as many as 100,000 jobs.

    JAISAL NOOR: The NFIB, or National Federation of Independent Business, predicts 100,000 jobs could be lost over the next decade if Maryland adopts a higher minimum wage. Higher labor costs would force employers to lay off tens of thousands of workers, including over 13,000 in the fast food sector alone, along with $61 billion in lost output over the next decade.

    I live in Maryland, and daggnabbit, I want the cheapest hamburger possible, and Virginia hamburger makers earn a lot less that Maryland hamburger makers, so I will drive a hundred miles or so round trip to save four cents on a hamburger.

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    1. Chris

      I live in MD too. I expect he’s projecting Beltway fantasy onto the worries of people in Cecil and Hartford counties. Or Carroll county. The lost jobs he’s concerned about aren’t minimum wage arrangements. They’re from all the big companies that have decided the best way to lobby the federal government is to be in NoVa, not MD.

      If MD would just make commuting to VA less nightmarish, like maybe turning the red line into a loop and adding another bridge or three, there wouldn’t be so many lost jobs and companies to VA.

      Outside of all that, the cost of living in most of MD is so high that I doubt many people would care if the minimum wage was raised to 15$/hr.

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  6. TG

    What is left unsaid is that the main effect of a minimum wage law, IF IT IS REALLY ENFORCED, is that it will limit the use of immigration to undercut wages.

    If I am working a business and my employees are making $15/hour, think how much easier it will be for me if I can get workers for $10/hour. Or $5/hour. Or less. And there is an unlimited supply of said workers in Bangladesh and Pakistan and Honduras etc.etc.

    However, if the minimum wages is $15/hour, then immigration won’t benefit me, there is no longer any gain to be had. And no long an incentive to drive domestic wages down towards third-world levels.

    A minimum wage cannot create wealth. If Bangladesh declared a minimum wage of $15/hour, it just would not work, there is not enough per-capita wealth for that. What a minimum wage can do, is stop the rich from destroying wealth for their own selfish interests.

    But of course, any discussion of the effects of supply and demand on the labor market is racist and racist and Literally Hitler, so feel free to ignore this analysis.

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    1. McGardner

      That’s a fine point TG. It actually turns the hiring process back towards the meritocratic model. If I’m hiring for $15/hr, I’m going to hire the best of the group, probably mother tongue quasi-educated, instead of the cheapest illegal I can find. These are the types of points upon which the Progs and MAGA nationalists can find common ground.
      There must be a theoretical cap, however, to how high a minimum wage can be set, otherwise the meritocracy fails and you get over-educated and capable sorts competing for the easiest job, i.e., min wage at $30/hr will bring out a ton of paralegals and drafters to sit at the YMCA front desk. It eventually breeds sloth as labor competes for the easiest job for the same $30, hence the slippery slope argument against the excesses of socialism.
      Point being, the ideal min wage rate is just above the breakpoint where legal American workers will accept a respectable ‘living wage’ and still have the incentive to move onwards and upwards from there. Maybe that is $15(?)
      Regardless, I hope both sides can agree we have to hold corporations and even mom and pops to the Federal I-9 and E-verify standards. It’s literaly killing the golden goose.

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      1. JBird4049

        I never heard anything on the fact that (adjusted for inflation) the minimum wage was just under $11 and since housing was much cheaper one could often rent an apartment or even a house; adjusting for increased productivity the minimum wage would be at least $15. There even a few fringy but not insane studies suggesting over $20 especially in the wealthy blue states. Up until the early 1970s wages rose with inflation and productivity. It has not since.

        Instead all I hear from the Republicans, libertarians, and even the Democratic leadership is how difficult it would be and how it would kill all those jobs that people can’t live on anyways. It is supposed to a livable wage. It’s almost as if people think Victorian England was a great idea.

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        1. McGardner

          That could well be that it’s $15-20+. And there may be fewer jobs, at which point, we get into scarcity of capital. People will have to choose where to spend their newly minted minimum wage dollars on pricey necessities. (Which is still ok being that our manic overconsumption might finally be tempered) Still, the benefits can be directed inwards and downwards.
          Take ag pickers for example. Close the borders and farm owners have to pay a serious wage to get Americans to go and bust their a$$ pickin cherry tomatoes. So it costs more at the grocery shelf. Is that bad? (Maybe you decide to grow your own) However, now an American has some money to spend instead of remittences going to Mexico and, no more taxpayer funded overstuffed hovels filled with migrant dreamers. This is such a key issue that the new left and new right can communicate on. I don’t know that the progleft can let go of its open borders – abolish ICE trope. Maybe. I’d be willing to bet however, that the MAGA right would support a solid wage for American workers. Realize that the Maga right are NOT neocon free traders; it’s two distinct subsets under the GOP big tent and they are quite at odds (nationalist right v globalist right).

          Reply
          1. JBird4049

            The modern neoliberal Democratic Party and the modern “conservative” Republican Party are true believers in free market capitalism, free trade, uncontrolled flows of capital and workers, open borders; the diminishment or even destruction of nations (I am not referring to countries), local rule of law as well democracy with the concurrent destruction of even mild forms of autocracy being necessary for this to succeed.

            Leftism, communism, socialism, fascism, even some strains of conservatism thought are often a reaction to the waves globalization which neoliberalism is its current ideology. Despite their many, many, many differences the economic impoverishment of nation or community for the god Mammon ain’t one of them. It is something to note that all the people screaming about all the -isms That Will Destroy Us All do not see that uncontrolled free market capitalism and globalization is the cause of their creation.

            Reply
            1. McGardner

              Wholly agreed, and this coming from a 2015 laissez-faire capitalist. The issue then becomes can we protect the individual’s rights within a sovereign nation of free trading peoples within their borders. This is where I stray from the koombaya. The ultimate minority is the individual and the socialist model ends up with a taking of ones Self by those annointed as caretaker of the Greatest Good. So I’m left with a traditionalist, capitalist (as-pricing-mechanism), isolationist, god-fearing paradigm that harkens back to the centuries of American lore.
              I don’t see how one gets to American socialism without a nasty battle of more than words. The entire premise is anti-American to begin with.
              Still open to all ideas though…

              Reply
              1. JBird4049

                To start, returning to the Bretton Woods system, which allowed for fairly free international trade, and allowed the individual countries to run their economies, because they were not completely locked into a globalized laissez-faire capitalism. Connected by mutually beneficial trade but open to the destructive economic divide and rule methods now used.

                Reply
                1. McGardner

                  Indeed. This would require a redefinition of the reserve currency, and the reality is that there’s no other bond market as deep as UST to support another currency acting as a reserve in lieu of the USD. Hard money ain’t gonna happen. SDF’s are awfully “globalist” and I doubt they would have much validity in a man-on-the-street exchange for goods situation. Granted, granular economics is above my paygrade, but the trend towards “retreating into one’s Nation”, as different from one’s State, is leading us away from the single world currency idea and towards more of a local barter situation. The immigration free-for-all has awoken this worldwide.

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    2. drumlin woodchuckles

      The “other half” of making that work requires meeting the inevitable rise of the inevitable black market in sub-minimum wage employment . . . especially of rightless illegal aliens who dare not report the sub-minimum wages to any authorities . . . . would be a way to find out who the illegal employERS are even without reporting by their employees. And then a system of mass incarceration in Federal Dungeons for all such illegal employERS . . . including homeowners who hire the illegal yard-worker and nanny.

      Put a half-million or so illegal employERS in prison for life and then the other illegal employER wannabes will finally get the point.

      Reply
  7. Pookah Harvey

    In the late 1990’s Washington state increased its minimum wage where it was 50% higher than in neighboring Idaho.

    The Association of Washington Business ” argued that Washington’s high minimum wage law would send businesses fleeing to Idaho. The group sent out a news release with a criticism of the law from John Fazzari, who owns a family-run pizza business in Clarkston, Wash., just minutes from the Idaho town of Lewiston.”

    I lived in the area and the two small towns are isolated and are connected by a bridge crossing the Snake River.

    What happened was covered in a NYT story 10 years later:

    But now Mr. Fazzari says business has never been better, and he has no desire to move to Idaho.

    “To tell you the truth, my business is fantastic,” he said in an interview. “I’ve never done as much business in my life.”

    Mr. Fazzari employs 42 people at his pizza parlor. New workers make the Washington minimum, $7.93 an hour, but veteran employees make more. To compensate for the required annual increase in the minimum wage, Mr. Fazzari said he raises prices slightly. But he said most customers barely notice.

    How about that business association that used Fazzari in their campaign against the increase:

    the Association of Washington Business, is no longer fighting the minimum-wage law, which is adjusted every year in line with the consumer price index.

    “You don’t see us screaming out loud about this,” said Don Brunell, president of the trade group, which represents 6,300 members.

    “It’s almost a no-brainer,” Mr. Brunell said, that the federal minimum should go higher. Association officials say they would like to see some flexibility for rural and small-town businesses, however.

    Washington’s robust economy, which added nearly 90,000 jobs last year, is proof that even with the country’s highest minimum wage, “this is a great place to do business,” Mr. Brunell said.

    The impact on the Idaho side was higher wages to keep good employees from crossing the borde. If increasing the minimum wage in such an isolated community does nothing but increase profits for local businesses and salaries for workers what more can you say.
    Here is the 2007 article https://www.nytimes.com/2007/01/11/us/11minimum.html

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  8. cripes

    Governor Hogan: “You’re not supposed to be able to support a family on minimum wage.”

    That was not true in the 1930’s when minimum wage was enacted, it’s total BS today.

    The idea minimum wage was only for high schoolers making a little extra money on the side is demonstrably untrue, most minimum wage workers are adults. Besides, why should a 17, 18, 19 year old make less for working the same 40 hours, if they can get it, than a 21 or 40 year old?

    And don’t get me started on ” shouldn’t be in poverty if you’re working 40 hours a week.”

    Working 30 hours means you should be in poverty?
    Tell it to employers that actively deny full-time work to employees to avoid benefits, health care, etc.

    Basically, FU.

    Reply
  9. Mark

    If only the US could look outside their own bubble and realise how bad the minimum wages really are.
    There is so much wealth in America to go around, but sadly the number of working poor is massive. The US economy could readily manage a $15 minimum wage. Though managing such a transition including illegal immigrant workers would be a challenge.

    https://en.wikipedia.org/wiki/List_of_minimum_wages_by_country

    List of countries by minimum hourly wage and equivalent percentage of GDP per capita. ($USD)
     Australia $14.56 50.80%
     New Zealand $11.7 54.30%
     Monaco $11.72 $17%
     Ireland $11.05 27.80%
     Germany $10.36 47.10%
     Netherlands $10.26 42.10%
     Canada $10.2 45.20%
     Belgium $10.7 45.90%
    United Kingdom $10.04 47.70%
     France $11.14 50%
     San Marino $10.38 38.40%
     Israel $8.09 38.60%
     South Korea $7.39 47.40%
     United States $7.25 26.20%

    Reply
  10. Telee

    Perhaps the conservative answer is to Lower the minimum wage to maybe $1.25/hour and then everybody will be able to find a job.

    Reply
  11. Denis Drew

    1968 fed min wage, DOUBLE-indexed for inflation and per cap growth = $23.44 an hour.

    yr……per capita…real min…(nominal)…[1968 wage inflation indexed alone]…% per cap growth … (DBL-index)
    (2017 dollars)

    68…..16,911…..11.49…..(1.60)…[1.60]………100%………..(11.49)
    69-70-71-72-73
    74…..19,983…..10.51…..(2.00)…[2.40]
    75……20,015…..9.87……(2.10)…[2.58]
    76…..20,705…..10.13…..(2.30)…[2.72]……….122%…………(14.00) [11.49 X 1.22]
    77
    78…..22,320…..10.39…..(2.65)…[3.15]
    79……22,639….10.40…..(2.90)…[3.53]
    80……22,117…..9.76……(3.10)…[3.98]
    81……21,997…..9.43……(3.35)…[4.38]………..130%…………(14.94) [11.49 X 1.3]
    82-83-84-85-86-87-88-89
    90……26,244…..7.31…..(3.80)….[6.26]
    91……25,728…..7.73…..(4.25)….[6.45]………..152%………….(17.46) [11.49 X 1.52]
    92-93-94-95
    96……28,306…..7.54…..(4.75)….[7.43]
    97……29,395…..7.93…..(5.15)….[7.58]………….174%………..(19.99) [11.49 X 1.74]
    98-99-00-01-02-03-04-05-06
    07……31,767…..7.08…..(5.85)….[9.80]
    08……30,775…..7.60…..(6.55)…[10.16]
    09……30,385…..8.41…..(7.25)…[10.16]………….180%………..(20.68) [11.49 X 1.8]
    10-11-12-13-14-15-16-17
    18……34,489…..7.16…..(7.25)…[11.49]……………204%………..(23.44) [11.49 X 2.04]
    https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-people.html
    https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1.60&year1=196801&year2=201706

    Reply
  12. Denis Drew

    If McDonald’s (really McDonald’s customers) can pay $15/hr with 33% labor costs, then, Target and Walgreen’s can pay $20/hr with 10-15% labor costs, and, Walmart should be able to pay $25/hr with 7% labor costs.

    Today, 40% of US workers earn less than $15/hr.
    http://fortune.com/2015/04/13/who-makes-15-per-hour/

    Today, bottom 40% earners take home 10% of overall income; (what I call) mid-59% take home 70% of overall income; top 1% take home 20% of overall income (up from 10% a couple of generations back).

    Double the take home of the bottom half with higher (union) prices and the mid-59% loses 14% of their income (10% of overall). Cannot get back 50% from top 1% incomes by raising the price of hamburgers …

    … get back to getting that back.

    Be in the best interests of fast food firms for other firms to become unionized — so their employees can afford more fast food. Way it works: when (mostly) unorganized US firms (vastly unorganized — 94%!) draw higher prices from consumers doing alright already, overall income shifts downward. Down there, employees tend to purchase proportionately more from other firms down there — which explains why minimum wage raises never cost any jobs down there …

    … but it may cost jobs up there — nobody ever seems to think about that.

    About getting 50% of top 1% income (10% of overall income). Back when I was a kid, we had a five star general Republican president and 92% income tax rate over something comparable to a million dollars a year. Rate much reduced to insure “incentive.” But, today’s top earners are taking 20X the wages for doing the same jobs (CEO, news anchor, quarterback) when average income (output per person, whatever) has only jumped 2X. They have 10X the “incentive” to spare.

    No brainer: return to confiscatory taxation. Problem: we mid-59% can understand the abstract need, but are sensibly over cautious about be restructuring the economy — the bottom 40% aren’t informed enough to know, while they are ready to support almost anything that will relieve their suffering. Got to get both together. Is this the way?

    https://onlabor.org/why-not-hold-union-representation-elections-on-a-regular-schedule/

    Reply

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