What the Research Says About a $15 Minimum Wage

The House voted to raise the federal minimum wage, but the bill will face opposition in the Republican-controlled Senate.
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U.S. Representative Alexandria Ocasio-Cortez (D-New York) waits on a table at the Queensboro Restaurant, on May 31st, 2019, in the Queens borough of New York City. Ocasio-Cortez participated in an event to raise awareness for the One Fair Wage campaign, which calls to raise the minimum wage for tipped workers to a full minimum wage at the federal level.

U.S. Representative Alexandria Ocasio-Cortez (D-New York) waits on a table at the Queensboro Restaurant, on May 31st, 2019, in the Queens borough of New York City. Ocasio-Cortez participated in an event to raise awareness for the One Fair Wage campaign, which calls to raise the minimum wage for tipped workers to a full minimum wage at the federal level.

The United States House of Representatives voted Thursday to raise the federal minimum wage to $15 per hour, higher than any current state minimum wage and more than double the current federal minimum wage of $7.25 per hour. The bill is likely to face challenges in the Republican-controlled Senate.

The federal minimum wage was last raised in 2009, and its value has been decreasing with inflation over the last 10 years. A yearly salary on $7.25 per hour comes out to about $15,000 per year, putting workers with families of two or more with no second source of income below the federal poverty level.

Although the federal government sets a base minimum wage, states can pass laws to implement a higher minimum wage. Currently, 16 states and Puerto Rico have set a state minimum wage equal to the federal minimum wage, and another five have no set minimum wage, thus defaulting to the federal minimum wage.

Twenty-nine states plus Washington, D.C., Guam, and the U.S. Virgin Islands have a minimum wage higher than the federal minimum wage, the highest among these being D.C., with a $14 minimum wage. In May, Connecticut became the seventh state to pass legislation to incrementally increase the minimum wage to $15 per hour.

Liberal efforts to raise the minimum wage have been met with opposition from moderates and conservatives, who point to adverse affects such as higher unemployment levels and consumer prices. A Congressional Budget Office report released earlier this month found that raising the federal minimum wage to $15 per hour would boost pay for 17 million workers currently earning less than that and would bring 1.3 million workers above the poverty level, though it would result in 1.3 million jobless Americans. (These numbers represent median findings, so in reality, job losses could be close to zero or as high as 3.7 million.) The report also found this wage hike would reduce business income and raise prices for consumers, though higher-income families would pay more of those costs.

A growing body of research indicates that job losses could be less extreme than the CBO projects. A working paper published earlier this month by economists at the University of California–Berkeley found positive effects of raising wages and no adverse effects on employment, weekly hours, or annual hours worked.

Still, many economists disagree: A recent survey conducted by the Employment Policies Institute found an overwhelming majority of economists surveyed predict raising the minimum wage to $15 an hour will have a negative impact on employment levels and jobs. (A 2014 New York Times investigation found the fiscally conservative institute is run by a public relations firm that also represents the restaurant industry, which often cites the institute's reports in lobbying campaigns against raising the minimum wage.)

In the handful of progressive cities that have already raised minimum wage to $15 an hour,  the results have been mixed. When New York City's wage bump went into effect in late December of 2018, restaurant owners said they needed to cut workers' hours in order to stay afloat, CBS News reports. The city's unemployment rate has risen from 4.0 percent to 4.3 percent since December of 2018. But when the City and County of San Francisco implemented a $15 minimum wage in July of 2018, it had the opposite effect: The unemployment rate has since dropped from 2.5 percent to 1.9 percent as of May of 2019.  

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