There’s been a renewed push to raise the federal and state minimum wage to $15 per hour and, naturally, the conservative pushback has been strong. The tale conservatives tell is that raising the minimum wage will bring about economic armageddon: workers will lose their jobs, companies will go broke and prices will skyrocket.
These claims are worth examining because they touch on a very serious question: Should people get paid more than poverty-level wages, which is exactly what the current minimum of $7.25 per hour is. Nobody can support a family, pay rent and cover health care on that wage; yet naysayers insist that raising it will do more harm than good, especially for those it’s intended to help. Their reasoning plays more on fear than facts — myths that keep people at poverty wages.
• Myth No. 1: The mother of all myths about the minimum wage is that raising it will destroy jobs. Historical evidence shows otherwise. A 2015 Tuck School of Business study surveyed 60 academic analyses dating to 2000 and found there is “no support for the proposition that the minimum wage has had an important effect on U.S. employment.” Likewise, a 2018 study at UC Berkeley concluded that increasing the minimum wage above $10/hour in Washington, Chicago, Seattle, San Francisco, Oakland, and San Jose resulted in “no significant negative employment effects.” “The sky is not falling,” as one researcher put it.
It’s not falling in our neighboring states either, where Ohio, West Virginia, Maryland, Delaware, New Jersey and New York all have higher minimum wages than Pennsylvania; yet, according to Keystone Research Center, each state has higher job growth, even in sectors like food service, which tend to be most affected by a minimum wage increase.
There are exceptions, of course. A 2017 study of Seattle’s increase to $13 an hour found a 10 percent reduction in hours worked (about 45 minutes less per week). But that study has also been contested by economists who say it contains methodological problems, such as the exclusion of the city’s largest employers and a focus on “teenagers and young people looking for their first job” — which leads to myth No. 2.
• Myth No. 2: The stereotype of a minimum wage worker is a teenager working part-time, but the truth is most workers on minimum wage are adults working full-time. In fact, the average age of a minimum wage worker is 35 years old (37 in Pennsylvania), and 90 percent are older than 20; hence, not teens. Also, 60 percent of minimum wage workers are women who earn 49 percent of their family’s income, which means they’re not simply working for extra cash.
• Myth No. 3: Raising the minimum wage is bad for business because it raises prices. It’s certainly true that raising the minimum wage will increase labor costs, but that doesn’t mean prices have to go up. Even when they do, price increases are typically minimal, less than 1 percent, according to the Berkley minimum wage study. So, in effect, you might pay a few more cents for coffee and french fries.
Meanwhile, higher wages can mean lower turnover for businesses, which reduces the cost of hiring and training new workers. It also means more money in the pockets of people who need to spend it, which can increase business sales.
This is why organizations like Business for a Fair Minimum Wage and the American Sustainable Business Council, which represent tens of thousands of small businesses, endorse a $15 minimum wage. It’s also why 67 percent of small business owners support increasing the federal minimum wage and adjusting it to keep up with the cost of living. They know that profits don’t have to come at the expense of their lowest-paid workers.
• Myth No. 4: The work being done by these workers is not worth $15 per hour. This is the most insidious myth, especially considering workers are being paid less than previous years. In 1968, the minimum wage was $10 per hour (adjusted for inflation). If it had kept pace with increases in labor productivity over the past 40 years, the minimum wage would be three times higher than it is today at $22 per hour. The reason it’s not goes to the heart of the minimum wage debate.
Workers’ wages go down (or don’t budge) because workers have little bargaining power, which means employers can keep their wages as low as possible. This is why governments are forced to raise them: because for decades, employers have kept the bulk of productivity gains for themselves and given virtually nothing to their lowest-paid employees. In response, workers have to turn to public policy (like minimum wage laws) to eke out minimal pay.
But precisely because employers exert almost as much power over government as they do their own workplaces, the minimum wage has barely budged.
Maybe it’s time to check that power. And maybe it’s time for employers to pay workers the value of what they produce.
Joe Tompkins lives in Meadville and teaches media studies at Allegheny College.