Do laws to raise the minimum wage help workers? Lots of legislators and presidential candidates seem to think so. All but three of the 2020 Democratic presidential candidates have pledged to support a $15-an-hour minimum wage. This session there were no fewer than eight bills introduced to raise the state’s minimum wage, half of those bills would have raised the minimum wage to $15-an hour. However, none had enough support to make it out of committee.
So how would raising the Federal minimum wage to $15/hour impact workers?
A new report from the nonpartisan Congressional Budget Office (CBO) suggests impacts aren’t what many legislators and supporters thought they would be.
CBO analyzed the of proposed phased-in increases in the minimum wage to $10, $12 and $15 an hour. They found:
In an average week in 2025, the $15 option would boost the wages of 17 million workers who would otherwise earn less than $15 per hour. Another 10 million workers otherwise earning slightly more than $15 per hour might see their wages rise as well. But 1.3 million other workers would become jobless, according to CBO’s median estimate. There is a two thirds chance that the change in employment would be between about zero and a decrease of 3.7 million workers. The number of people with annual income below the poverty threshold in 2025 would fall by 1.3 million
In plain English, this means three people would lose their jobs for every person lifted out of poverty.
That’s an awfully expensive anti-poverty program.
Civitas has long opposed minimum wage legislation. Not because we don’t want people to have better wages but because such proposals only treat the symptom, not the problem. Moreover, minimum wage laws end up eliminating jobs for those who often need them most. Minimum wage laws are job=killers.
There are better and easier ways to increase wages. For starters policymakers should ask: Do our policies encourage strong families? Do we have a tax policy that favors investment? Have we reduced barriers to job creation? And do we provide all children access to quality educational opportunities? If we can answer yes to all these concerns, we are helping to create an environment where families, employees and businesses will flourish.
For more on the harmful impacts of minimum wage laws see The Minimum Wage Myth.