The idea that the federal minimum wage should be raised to $15 has now become so mainstream that most Democratic candidates for president have endorsed it. But as the movement gains steam, so does conservative resistance. Raise the minimum wage, some economists and conservative commentators warn, and American workers will suffer. Ed Rensi, the former CEO of McDonald’s, told Fox Business that a $15 minimum wage “will drive inflation like crazy. Raising the wage is “morally wrong,” the Heritage Foundation claimed in January, because it would cut people off from entry-level, low-wage work. Hans Bader, in a post for the libertarian Foundation for Economic Education, dismissed a $15 minimum wage as self-defeating sanctimony. “By advocating minimum wage hikes, people get to signal their own political virtue — at the expense of other people’s jobs,” he wrote.
But June 17 marked the longest period of stagnation in the history of the federal minimum wage. It hasn’t been raised since 2009 — and that neglect has created real economic hardship for low-wage workers. When the minimum wage doesn’t keep pace with inflation, the purchasing power of that wage shrinks; by failing to act, the federal government has essentially cut real wages for these workers. In February, economist Ben Zipperer of the left-leaning Economic Policy Institute testified before Congress that workers who make “the federal minimum wage of $7.25 an hour are, after adjusting for inflation, paid 29 percent less than their counterparts 50 years ago.” For workers, then, wage hikes aren’t about moral posturing but about the living more dignified lives, and now they have even more proof that an increase in the minimum wage makes them materially more secure. On Tuesday, economists at the University of California at Berkeley’s Institute for Research on Labor and Employment released a new study that directly undercuts common conservative arguments against a higher minimum wage: Policies that raise minimum wages don’t appear to cause significant job loss. In fact, they reduce poverty.
Anna Godoey and Michael Reich told reporters that they examined wage variations within states to find out exactly what happens when policy raises local minimums closer to the national median wage. That strategy distinguishes their research from other studies, which have tended to focus on state- or citywide data; altogether, they studied 51 minimum wage increases of varying extents in what they classified as low-wage counties, located in 45 states. They also focused exclusively on workers who are most likely to hold minimum-wage jobs: people “with a high school education or less, and teens.” The lower a person’s level of education, the likelier he or she is to live in poverty; these workers are uniquely vulnerable to any fluctuation in the minimum wage and have the most to lose if a policy fails to achieve the progress it seeks. Godoey and Reich say these workers largely benefited from laws that raised minimum wages. “We do not detect adverse effects on employment hours or weeks worked,” they wrote. Instead, they found reduced rates of child and household poverty “in counties with high relative minimum wages” and concluded that women and people of color also did not suffer adverse effects from laws raising the minimum wage. So much for the economic devastation predicted by conservative columnists.
Godoey and Reich’s research isn’t anomalous. Previous IRLE research found that six major U.S. cities — Oakland, Chicago, and San Francisco among them — didn’t experience significant job losses after they raised their minimum wages. And last December, the latest installment in the University of Washington’s ongoing study of Seattle’s minimum-wage hike found that people working anywhere from 600 to 700 hours per year before the increase received higher pay after the policy took effect. (An analysis in the New York Times suggested that this is some proof that higher wages offset possible cuts to a worker’s hours.) That’s at odds with the university’s first study on the Seattle policy, which claimed, controversially, that the hike did cost the city jobs and which looks more and more like an outlier with every new addition to minimum-wage research.
Put in practical terms, the new Berkeley study is further evidence that workers, and not the nation’s conservative columnists, are right. Bills like the Raise the Wage Act of 2019, which would raise the minimum wage to $15 an hour by 2024, aren’t just liberal performance art but sound policies that would meaningfully reduce poverty without driving vulnerable people out of work. The federal government’s failure to act might benefit CEOs like Enzi, who presided over McDonald’s while it paid workers poverty wages for years. But it’s an act of neglect that workers can’t afford and that the nation can afford to remedy.