Weighing The Larger Costs Of A $15 Minimum Wage
With Jane Clayson
The $15 dollar minimum wage could boost pay for 17 million but some workers might lose their jobs. We’ll add up the benefits and costs.
Anna Godøy is a labor economist at the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment at the University of California, Berkeley. She also co-authored a new study in which she found no evidence that minimum wage hikes lead to significant job losses or fewer work opportunities. ( @AnnaGody1).
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Wall Street Journal: $15 Minimum Wage Would Bring Mixed Fortunes for U.S. Workers
“Increasing the national minimum wage to $15 an hour would deliver a raise for millions of U.S. workers but could also cost 1.3 million Americans their jobs, according to a government forecast that complicates congressional Democrats’ push to more than double the federal pay floor.”
“If the federal minimum wage were raised to $15 an hour in 2025, as House Democrats have proposed, a significant number of Americans would likely lose their jobs, a study released Monday by the nonpartisan Congressional Budget Office found.”
“But the study also estimates that in an average week in 2025—the year after the House measure would take full effect—a $15-an-hour minimum wage would boost the pay of 17 million workers who would otherwise earn less than $15 per hour. It could also raise the pay of 10 million workers who otherwise would earn slightly more than $15 an hour. Raising the federal minimum to $15 would lift 1.3 million Americans out of poverty, the CBO said.”
“The agency prepared the report on the effects of lifting the wage from $7.25 an hour ahead of next week’s expected House vote on a bill that would gradually lift the pay floor to $15 an hour by 2024. In the U.S., 21 states follow the federal minimum wage, while others have set rates as high $12 an hour, including some that will reach $15 an hour in the coming years.”
“A $15 federal minimum wage would likely boost pay for 27 million US workers, lifting 1.3 million households out of poverty, according to an analysis released Monday by congressional economists.”But the income boost may come with a cost: It could trigger 1.3 million job losses.
“The nonpartisan Congressional Budget Office released this conclusion in a report that analyzes the economic impact of the Raise the Wage Act, a House bill that would gradually double minimum hourly pay by 2025.”
“The report comes as members of Congress prepare a vote to increase the federal minimum wage for the first time in more than a decade. It’s only the second study ever to focus entirely on the impact of a $15 minimum wage, and its findings are less rosy than the first one.”
“The other study comes from economists at the University of California Berkeley, who released a white paper last Tuesday finding that a $15 minimum wage would go a long way to combat income inequality — while its impact on job loss is likely small to none.”
“The central question in the minimum-wage debate has shifted. Where economists once asked, ‘Will raising the wage floor kill jobs?’ they now ask, ‘Just how transformative could a higher minimum wage be?’”
“They can move onto bigger questions now that new, high-quality research has pushed economists to acknowledge that raising the minimum wage hasn’t, in recent decades, destroyed jobs by making workers too expensive.”
“But there’s a notable holdout. On Monday afternoon, the Congressional Budget Office estimatedthat raising the minimum wage to the $15 level proposed by many Democratic candidates could cost 1.3 million jobs, while raising the earnings of 27.3 million workers.”
“But even the CBO included scenarios in which no jobs would be lost. Economic Policy Institute economist Ben Zipperer says it’s an acknowledgement that raising the minimum wage hasn’t proven to be as dangerous as researchers once feared. He added that the CBO’s median estimate nonetheless appears overly pessimistic.”
“’While they are acknowledging some of the research,’ Zipperer said, ‘I think they are drawing on older research that the new research has pointed out is problematic.’”
“According to Berkeley economist Michael Reich, the CBO appears to have picked a grab bag of high-quality and now-discredited studies, and weighted them all the same in their analysis. It ‘reveals an unwillingness to recognize the major differences in scientific quality among studies,’ Reich said.”
“The CBO relies on a variety of questionable assumptions, UMass Amherst minimum-wage expert Arindrajit Dube said. Many have been rebutted by the wave of minimum-wage research, which includes a new working paperfrom Reich and his colleague Anna Godoey, who measured the local effect of 51 changes in the minimum wage since 2007. Their work is some of the first to address hikes as large, in magnitude, as those that we’d see if the U.S. adopted a $15 minimum wage.”
Grace Tatter produced this hour for broadcast.
This article was originally published on WBUR.org.
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