Economists Report that a $15 Minimum Wage Only Hurts Low Wage Workers!

From the Daily Caller News Foundation:

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The push by labor unions and activists to raise the minimum wage to $15 an hour may hurt young and less-educated workers the most.

In 2013, the Obama administration proposed an increase to the federal minimum wage from $7.25 to $9.00 an hour. President Barack Obama has continued to call for an increase in the federal minimum wage.

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The fight focuses on $15 as the new minimum acceptable number to activists and labor leaders. Seattle raised its minimum wage to $15 in 2014, followed by San Francisco and Los Angeles. Gov. Andrew Cuomo signed into law a new $15 minimum wage for New York state in 2016, and the University of California has proposed to pay its low-wage employees $15.

While some major economists have supported Obama’s call for a minimum wage hike, most are not in favor with raising it to $15. Harry Holzer, with the Brooking Institute and Georgetown University, wrote in a report that, “minimum wage increases tend to reduce employment, hurting young and less-educated workers the most.”

“I have much more serious worries about a $15 an hour minimum wage, which constitutes a wage increase of 50% to 100% in most places,” Holzer wrote. “In job markets where young or less-educated workers already have difficulty finding jobs and gaining important work experience, such mandates [$15 minimum wage] will likely make it much harder.”

Holzer explained that when the minimum wage is increased in local municipalities, it incentivizes employers to leave that municipality, and move their work force to a neighboring area, often a suburb. Holzer uses Washington, D.C., as an example. “If D.C. raises its minimum to $15, while Arlington, Virginia remains at $7.25, the incentives for employers with many low-wage workers to shift places of business from the former to the latter will be quite strong.” Holzer is concerned that the increase would effectually “break the camel’s back” for many D.C. businesses, who already face layers of bureaucracy and local government regulations.

Not only would a dramatic increase in the minimum wage jeopardize businesses that operate in communities with the new $15 mandate, it may also expedite the growth of automation and robots. Aparna Mathur told TheDCNF that, “even left-leaning economists have said that while they want a hike, but not that high ($15.00).”

Mathur discussed the shift to automation, and how a push for a $15 minimum wage might just be enough for companies to expedite plans to automate industries such as fast food. “We know that we don’t really need someone to take an order [fast food], and we will eventually have machines do it. It is risky to fight for something that could put you out of work.”

Instead of a fight for such a dramatic increase in the minimum wage, training programs and workforce education initiatives would be more beneficial to both employees and the employers, according to Mathur. She suggested that, “the only real solution is to enable these people to acquire a different skill set that does not let their job be wiped out by a machine.”

Mathur also predicted an increase in wage fraud and more workers being paid under the table if the minimum wage were increased to $15.00.

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