Right-wing media have responded to the news that California and New York plan to phase in a $15-per-hour minimum wage by peddling myths that raising the wage will hurt the poor and cost jobs. Wall Street Journal editorial board member Jason Riley added to the misinformation campaign by claiming in an op-ed that raising wages would hurt young and entry-level workers, and that minimum-wage workers do not need a raise because most are not poor.
Journal Claims Minimum-Wage Workers Do Not Need A Raise Because They Are Unlikely To Be Poor
WSJ: Most Minimum-Wage Workers Are Not Poor And Are Teenagers Or Retirees. On April 5, Wall Street Journal editorial board member Jason Riley wrote in and op-ed that raising the minimum wage to $15 per hour would not reduce poverty and that it would cost young people and entry-level workers jobs, hurting workers of color in particular (emphasis added):
Some workers may be better off under a higher minimum, but not everyone. Younger and less-experienced workers, who are disproportionately black, are especially vulnerable to mandatory wage increases, since their employers are more willing and able to reduce hours, cut benefits or mechanize a task in an effort to save money. The government can mandate that an unskilled worker be paid more money, but that won't make the worker more productive or ensure that he keeps his job.
These so-called disemployment effects are played down by liberals, but they get to the crux of the problem with the policy. Most minimum-wage workers are neither poor nor the sole breadwinner of the family. Statistically, they are much more likely to be seniors staying busy in retirement, teenagers gaining work experience, or someone with young children working part-time until school lets out. What characterizes most poor households in the U.S. is a lack of workers--any workers--not people already in the labor force who earn too little. Any policy that reduces job prospects for the less-skilled is not reducing poverty and may well be exacerbating it. [The Wall Street Journal, 4/5/16]
Even $15 Per Hour Might Not Be A Living Wage
ThinkProgress: Living Wage In California And New York Would Be $22 Per Hour. On October 16, ThinkProgress published a national map on living wages created by The Alliance For A Just Society, an economic, racial, and social justice advocacy organization. It shows that even $15 per hour would not be a living wage in most states, including California and New York. The piece noted that the “federal minimum wage still remains at an impossibly low $7.25 per hour”:
CEPR: If The Minimum Wage Reflected Increases In Worker Productivity, It Would Be Nearly $22 Per Hour. According to a March 2012 issue brief by the Center for Economic and Policy Research (CEPR), if the federal minimum wage had kept up with increasing worker productivity since the 1970s, it would have reached $21.72 per hour in 2012:
By all of the most commonly used benchmarks -- inflation, average wages, and productivity -- the minimum wage is now far below its historical level.
Since 1968, however, productivity growth has far outpaced the minimum wage. If the minimum wage had continued to move with average productivity after 1968, it would have reached $21.72 per hour in 2012 -- a rate well above the average production worker wage. If minimum-wage workers received only half of the productivity gains over the period, the federal minimum would be $15.34. Even if the minimum wage only grew at one-fourth the rate of productivity, in 2012 it would be set at $12.25. [Center for Economic and Policy Research, March 2012]
Minimum Wage Workers Are Not All Teenagers Or Entry-Level Employees
Bureau Of Labor Statistics: 55 Percent Of Minimum Wage Earners In 2015 Were 25 Years Or Over In Age. According to the Bureau of Labor Statistics (BLS), in 2015, of the nearly 2.6 million American workers paid at or below the federal minimum wage, more than half were aged 25 and above, representing 1.4 million people. [Bureau of Labor Statistics, accessed 4/6/16]
IRLE: In Los Angeles, Raising The Minimum Wage To $15 Lifts Pay For Over 40 Percent Of Workers; “Only 3 Percent Are Teens.” In a March 2015 report on the effects of raising minimum wages to $15 an hour in Los Angeles, economist Michael Reich and a team of researchers from the University of California-Berkeley's Institute for Research on Labor and Employment (IRLE) found that over 40 percent of workers in Los Angeles would receive a direct or indirect pay increase if the city's minimum wage were set at $15 per hour. The report found the large majority affected would be adults, with the median age being 33:
- The proposed policy would result in significant benefits to workers and their families. By 2017, we estimate that 542,000 workers in Los Angeles, or 37.8 percent of the covered workforce, will receive a wage increase from the proposed law. These estimates include a ripple effect in which some workers who earn above the new minimum wage also receive an increase. Average annual earnings will increase by 20.4 percent, or $3,200 (in 2014 dollars).
- By 2019, we estimate that 609,000, or 41.3 percent of the covered workforce, will receive a wage increase from the proposed law. Average annual earnings will increase by 30.2 percent, or $4,800 (in 2014 dollars).
- The large majority of affected workers will be adults with a median age of 33 (only 3 percent are teens). [Institute For Research On Labor And Employment, University of California, Berkeley, March 2015]
NELP: Entry-Level Workers Are “Going Nowhere Fast.” In a July 2013 review of low-wage positions in the fast food industry titled “Going Nowhere Fast,” the National Employment Law Project (NELP) found that entry-level positions offered little room for promotion or advancement. The study also concluded the fast food industry purposely engages in misinformation, promoting a “mobility myth” to employees:
Despite what the data make clear about the barriers to upward mobility in the fast food industry, spokespersons for the industry and representatives from the major chains have collectively promoted a “mobility myth” that characterizes low-wage fast food jobs as springboards for advancement to managerial positions or opportunities to open a franchise [National Employment Law Project, July 2013]
EPI: Low-Wage Workers Are Not Predominantly Teenagers. On April 27, 2012, the Economic Policy Institute (EPI) published a report on the demographics of low-wage workers that found most are not teenagers. EPI found women, young people and people of color are overrepresented in low-wage jobs and less than a third of low-wage workers live in households making more than $50,000 a year:
Key findings include:
- Female, young, and minority workers are overrepresented in the ranks of low-wage workers, when “low-wage” is defined as below the wage that a full-time, full-year worker would have to earn to live above the federally defined poverty threshold for a family of four. (In 2011, this was $23,005 per year, or $11.06 when adjusted to hourly wages.)
- In 2011, only 31.5 percent of low-wage workers lived in households with a family income greater than $50,000, indicating that low-wage workers are not predominately teenagers living with their parents or adults with low-paying jobs living with a higher-earning spouse. [Economic Policy Institute, 4/27/12]
Economic Research Shows Positive Or Neutral Job Market Impact Of Raising The Minimum Wage
Cornell University Study Debunks The Myth That Minimum Wage Increases Hurt Job Market For Low-Wage Workers. In the December 2015 edition of the Cornell Hospitality Report, researchers at Cornell University found that over the past 20 years, raising the regular and tipped minimum wage for workers in the restaurant and hospitality industries has “not had large or reliable effects” on the number of people working in those industries. The researchers also found that increased wages could have positive side effects such as reduced employee turnover, and they recommended that opponents embrace “reasonable increases in the minimum wage”:
Although minimum wage increases almost certainly necessitate changes in restaurant prices or operations, those changes do not appear to dramatically affect overall demand or industry size. Furthermore, there is strong evidence that increases in the minimum wage reduce turnover, and good reason to believe that it may increase employee productivity as well. While prospective large increases in minimum wage mandates may have more noticeable effects, the evidence suggests that the restaurant industry should accept reasonable, modest increases in the minimum wage.
There is strong evidence that increases in the minimum wage reduce turnover, as mentioned previously. While no study has tested our belief that increasing the minimum wage will increase employee happiness and productivity as well, our reasoning is theoretically sound and consistent with more general research on compensation effects. Moreover, the research reviewed and reported here suggests that the industry has little to lose by acting on this belief. Thus, we contend that the restaurant industry should support rather than oppose reasonable increases in the minimum wage. [Cornell Hospitality Report, December 2015]
CEPR: Increasing The Minimum Wage Has “No Discernable Effect” On Employment. In an exhaustive February 2013 report reviewing dozens of studies gauging the relationship between increased minimum wages and employment, the Center for Economic and Policy Research (CEPR) concluded that local, state, and federal minimum wage increases had a negligible effect on job creation:
Economists have conducted hundreds of studies of the employment impact of the minimum wage. Summarizing those studies is a daunting task, but two recent meta-studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers. [Center for Economic and Policy Research, February 2013]
Minimum Wage Increases Do Not Hurt Teen Employment
IRLE: Minimum Wage Has Nothing “But Very Small Disemployment Effects” On Teen Employment. An April 2011 report by University of California-Berkeley's Institute for Research on Labor and Employment (IRLE) studying the effects of minimum wage increases on teen employment found:
Including controls for long-term growth differences among states and for heterogeneous economic shocks renders the employment and hours elasticities indistinguishable from zero and rules out any but very small disemployment effects. Dynamic evidence further shows the nature of bias in traditional estimates, and it also rules out all but very small negative long-run effects. [Institute for Research on Labor and Employment, University of California, Berkeley, April 2011]
EPI: “The Warnings Of Massive Teen Job Loss Due To Minimum Wage Increases Simply Do Not Comport With The Evidence.” In a November 25, 2009, post by economist Heidi Shierholz of the Economic Policy Institute found that teen employment is affected more by broad economic trends, like a recession, than by changes in the minimum wage:
While it is true that there is some disagreement among economists about whether increasing the minimum wage increases or decreases employment, there is a consensus on the essential point: the impact of a minimum wage raise on jobs, whether positive or negative, is small. The warnings of massive teen job loss due to minimum wage increases simply do not comport with the evidence. [Economic Policy Institute, 11/25/09]