Politics & Policies

$15 Minimum Wage Proposals in US – Pieces on the raging debate

The plans to raise the minimum wage to $15 in California and New York are ambitious and welcome at a time when the eroding value of the Capture d’écran 2016-04-09 à 09.20.49federal minimum wage means more and more working families can afford less and less. California’s minimum wage would reach $15 in 2023 for all employees and in 2022 for those in firms with more than twenty-five employees. New York’s plan would raise the minimum wage to $15 by 2018 in New York City and by 2022 in the City’s suburbs and on Long Island. The minimum wage upstate would rise to at least $12.50, with the possibility of then going higher. These increases are significantly larger in scope than what has been typical of recent federal and state minimum wage hikes. Furthermore, both proposals would raise the wage floor to levels relative to the wages of typical workers that have not been the norm for at least three decades.The fact that these proposals are outside the bounds of recent experience does not automatically make them ill-conceived. Moving beyond the timidity of most recent minimum wage hikes is exactly what is needed if we are to undo decades of falling wages and deteriorating living standards for the lowest-paid third of America’s workforce.

The Berkeley Labor Center estimates that 5.6 million workers—or the entire bottom third of the California workforce—would benefit from the California increase (excluding those already helped by various city initiatives). EPI’s analysis estimates that 3.2 million workers, or 37 percent of the New York workforce, would benefited from a statewide increase to $15, although the number affected by the current proposal would be less, given the smaller wage hike in the upstate region.

Adjusted for inflation, New York’s current $9.00 minimum wage is six percent below the national minimum wage in 1968, its peak year in inflation-adjusted terms. California’s current $10.00 minimum is just four percent above the 1968 value. Using the CBO’s projections for inflation, going to $15 by 2023 is equivalent to $12.80 in 2015 dollars, a twenty-eight percent boost from 1968. There are two things worth noting about this increase in purchasing power. First, prices are higher in New York and California relative to the national average (15.3 and 12.3 percent, respectively), so comparing them to national price changes overstates the purchasing power of the minimum wage for people in these states. Second, productivity has more than doubled in the nearly five decades since 1968. These proposals would set a wage floor that reflected just one quarter of the improvement in our economy’s ability to generate income because of this productivity growth since the Johnson administration.

Chosen excerpts by Job Market Monitor. Read the whole story at  California and New York’s bold $15 minimum wage proposals are exactly what we need | Economic Policy Institute

When California legislators voted to raise the statewide minimum wage to $15 per hour by 2022, labor activists cheered. Discounting fears that a $15 minimum might cost some low-wage workers their jobs, activists and their political allies celebrated a victory for fairness and economic justice.

Progressive labor activists took a very different view 100 years ago, when 15 states established America’s first minimum wages. Labor reformers then believed that a legal minimum would hand a raise to deserving white Anglo-Saxon men, and a pink slip to their undeserving competitors: “racially undesirable” immigrants, the mentally and physically disabled, and women. The original progressives hailed minimum-wage-caused job losses among these groups as a positive benefit to the U.S. economy and to Anglo-Saxon racial integrity.

Brown’s minimum wage compromise is good, but it isn’t good enoughIn 1910, 22% of the U.S. workforce was foreign-born. A Who’s Who of American economic reform warned that immigration was leading to “race suicide,” what President Theodore Roosevelt in 1907 called the “greatest problem of civilization.” This race suicide theory claimed that because non-Anglo-Saxon immigrants had low living standards, their competition in the labor market undercut the wages of the American workingman. The key assumption was that Anglo-Saxon natives were more productive, but that immigrants worked cheap. As Stanford sociologist and avowed nativist Edward A. Ross put it, “the coolie, though he cannot outdo the American, can underlive him.” Woodrow Wilson, echoing many others, said that Chinese immigrants could “live upon a handful of rice for a pittance.” Similar charges were made against Jews and Catholics arriving from southern and eastern Europe.

Chosen excerpts by Job Market Monitor. Read the whole story at  Minimum wages were first designed to keep women and minorities out of jobs – LA Times

As states like California and cities like Seattle boost their minimum wages up to $15 an hour, critics warn that job losses will be inevitable. In particular, one major line of criticism from outlets like the Wall Street Journal editorial page and Forbes’s Tim Worstall is that big increases in pay floors only lead to job loss via automation. Both critics point to initiatives at McDonald’s and Wendy’s to automate more of the service process, and warn that robots, rather than workers, will be the real winners if liberals succeed in boosting minimum pay.

This is doubly wrong. On the one hand, there’s little guarantee that increased minimum wages really will increase the pace at which labor-saving technology is developed. On the other hand, there’s no reason to think this would be a bad scenario.

If minimum wage hikes really do spur the creation and adoption of high-quality new equipment to automate elements of, say, the food service industry, then that would be a very positive outcome that implies minimum wage hikes are a great idea. Productivity-enhancing technology, after all, is a crucial pillar of social and economic progress. The problem in recent years is that we haven’t had nearly enough of it.

California’s minimum wage hike pushes the issue beyond the terrain in which it’s been studied. Given that, a huge increase in automation is really the optimistic outcome. The thing to worry about is that the robots won’t happen, not that they will.

Chosen excerpts by Job Market Monitor. Read the whole story at  Will minimum wage hikes lead to a huge boost in automation? Only if we’re lucky. – Vox

The Empire Center and American Action Forum (EC/AAF) have released a report, “Higher Pay, Fewer Jobs,” predicting that Governor Cuomo’s proposal to phase New York’s minimum wage up to $15 by 2021 statewide (and by 2018 in New York City) would result in the loss of hundreds of thousands of jobs across the state.  But while the impact of a proposed minimum wage increase on New York’s workers, businesses and economy is an important question, the EC/AAF report sheds little light on the answer.

In this policy brief we fact check the assumptions and conclusions found in the EC/AAF report.  We find that:

  • The EC/AAF report is based on an outdated body of research, and two individual studies that have been critiqued by expert labor economists and found not to be credible. It therefore erroneously overstates the job loss effects of increasing New York’s minimum wage to $15.
  • Instead, “meta-studies” of the minimum wage research field show that the majority of credible studies in the U.S. find that minimum wage increases lead to higher take-home pay for affected workers with little or no adverse effect on employment levels. In part this is because when wages increase, businesses enjoy offsetting savings as a result of reduced employee turnover, improved morale and productivity, and improved customer service.
  • Economists who have looked carefully at the likely effects of a phased-in $15 minimum wage conclude that it would have positive overall effects and could be manageably absorbed.
  • The EC/AAF report also ignores other important economic factors in New York, such as the reality of New York State’s compensation-profit trends and the substantial costs to the taxpayers of low-wage employment practices.

Chosen excerpts by Job Market Monitor. Read the whole story at  Fact-Checking the Empire Center Analysis of NY’s Proposed $15 Minimum Wage: Flawed Methods, Erroneous Results |

Raising the minimum wage in California to the highest statewide level in the nation would eventually cost taxpayers an additional $3.6 billion a year in higher pay for government employees, according to a legislative analysis released Wednesday.The estimate was disclosed as an Assembly committee considered boosting the wage to $15 an hour by 2022. The full Assembly and Senate could vote on the deal between Gov. Jerry Brown, labor unions and Democratic legislative leaders as early as Thursday.The financial projection does not examine the broader economic impact that the proposed wage hike would have on businesses in the state.

Source: Analyst: Wage hike would cost California taxpayers $3.6B – The Washington Post


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