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GOING UP: Fast food workers in the Los Angeles area made their case to raise the minimum wage back in August.
Jim Ruymen/UPI/Landov
GOING UP: Fast food workers in the Los Angeles area made their case to raise the minimum wage back in August.

Wages of federalism

Money | State efforts will help us learn about the economic effects of minimum wage hikes

Up to three-fourths of Americans support some form of minimum wage increase, according to various polls. Democrats call those wage hikes a lifeline and a no-brainer for poor workers in this election year, arguing that the extra spending money could be a deficit-free economic stimulus. Republicans tend to cite research showing minimum wage hikes can crowd out the low-skilled workers who need jobs most.

The debate has yielded some surprises. Traditionally liberal Bill Gates called the minimum wage a “huge trade-off” with lost jobs on liberal MSNBC. The flummoxed hosts offered him some clichés to get back on track, but he wasn’t biting: “It’s not as simple as just saying, ‘Let’s raise the wage.’” 

Some conservatives are bucking labels, too. Fox News host Bill O’Reilly has come out in support of a national $10.10 wage, and a more libertarian Ron Unz even has a ballot initiative in the works in California. Concerned about illegal immigration, Unz advocates a $12 minimum wage to take jobs from illegal immigrants and get more Americans into those lines of work.

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While a minimum wage hike seems likely to increase unemployment—the nonpartisan Congressional Budget Office projects Obama’s proposed hike will cost 500,000 jobs—proof is hard: How do we isolate the minimum wage from the large number of other economic cogs affecting employment? The left widely cites recent studies in which adverse employment effects tend to disappear when multiple factors previously underrated are factored in. But other economists have doubts about the new methods, noting that simple tweaks produce results more in line with established evidence—employment drops to low-skilled workers. 

In the realm of politics, there’s a study for every viewpoint. Arguments are often oversimplified and built on clichés, and the words “overwhelming evidence” carry little more weight than “I think.”

Over the next several years, though, more hard evidence will be available. That’s because states are heading in different directions regarding minimum wages, and in that sense fulfilling their function as “laboratories for democracy.” Some are sticking with the national minimum wage of $7.25 per hour, but 13 states raised their minimum wages on Jan. 1, and California gets a hike July 1. Pay close attention to San Jose, San Francisco, and Seattle, where wage jumps to $10.15, $10.55, and $15, respectively, in the last 12 months have started a wave of anecdotes on potential cut hours and lost jobs.

And furthermore, at least 30 states are taking up President Barack Obama’s challenge in his State of the Union address. West Virginia’s legislature in January proposed a $1 increase to $8.25 in 2015. Arkansas residents are gathering signatures for a ballot initiative for a three-year increase to $8.50. In Washington, D.C., itself, a years-long battle ended when Mayor Vincent Gray signed a raise to $11.50 by July 2016.

Obama praised a Minneapolis pizza joint that set a $10 minimum for itself. “Do what you can to raise employees’ wages,” he urged employers. But he proceeded to encourage Congress, states, and mayors to force those who won’t—or can’t—pay more. At least 30 jurisdictions are considering wage increases of their own this year, through means ranging from state constitution to city ordinance. Will it hurt those who need jobs? In a few years we’ll have plenty of evidence about the minimum wage’s employment effects. Will there be equal honesty? 

Andrew Branch
Andrew Branch

Andrew is a freelance writer living in Raleigh, N.C. He was homeschooled for 12 years and recently graduated from N.C. State University. He writes about sports and poverty for WORLD. Follow Andrew on Twitter @AndrewABranch.

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