A $15 Minimum Wage Goes National

Original Article: https://www.wsj.com/articles/a-15-minimum-wage-goes-national-1542918020

  • Author: Michael Saltsman

  • Publication Date: November 2018

  • Newspaper: Wall Street Journal

  • Topics: Living Wage, Minimum Wage

The “Fight for $15” minimum-wage movement has fought its way to the top of Democrats’ 2019 agenda. Rep. Bobby Scott, a Virginia Democrat expected to chair the House Education and Workforce Committee next year, promised a minimum-wage bill would “be one of the first we consider.” Nancy Pelosi boasted last year that a $15 minimum wage would pass “in the first 100 hours” of a Democrat-controlled Congress.

Do Republicans have the spine to fight against a $15 minimum wage? Don’t be so sure. Two of the last three minimum-wage increases were signed by GOP presidents. Seven Republican senators represent states that currently or will soon have minimum wages of $11 or higher, so raising the federal minimum by a few dollars wouldn’t materially affect their constituents. If these Republicans want to avoid a fight, Mrs. Pelosi’s 100 hours may not be necessary.

For the past five years, Democrats have been radicalizing on the minimum-wage issue. In his 2013 State of the Union address, Barack Obama identified a $9 federal minimum wage as the ideal; by the following year, Democrats had rallied around $10.10. In 2015, Rep. Scott’s Raise the Wage Act proposed a $12 minimum wage. In 2017, 23 Senate Democrats led by Sen. Bernie Sanders introduced their own Raise the Wage Act, embracing the $15 figure popularized by the Service Employees International Union.

Historically, the federal minimum-wage standard has been more modest. Established by the 1938 Fair Labor Standards Act, the first federal minimum was $0.25 an hour, or $4.20 in 2015 dollars. It began primarily as a skilled minimum wage, applied to industries such as mining, manufacturing and transportation. As it expanded to include jobs in the service industry, the minimum wage in effect became a wage floor for unskilled labor.

Adjusted for inflation, again in 2015 dollars, the federal minimum wage has been as high as $10.90 an hour, in 1968, and as low as $3.93, in 1948. But the average federal minimum wage over its 80-year history in the U.S. has been $7.40 an hour, with a median of $7.33, both just slightly higher than the current federal standard of $7.25.

Today, less than 3% of the hourly workforce earns the minimum wage. By contrast, a forthcoming analysis from Miami and Trinity University economists shows that a $15 minimum wage would cover 44% of the hourly workforce in 2020. An estimated 2.3 million jobs would be at risk of elimination, while skilled employees who already earn $15 an hour could find their efforts devalued.

In an unguarded moment in 2014, SEIU organizer Kendall Fells acknowledged that the labor union plucked the $15 number out of thin air: “Ten dollars was too low and $20 was too high, so we landed at $15.” Not surprisingly, the handful of locales that have implemented this arbitrary standard have found it to be extremely disruptive. A 2017 analysis of more than a dozen cities in the San Francisco Bay Area from researchers at Harvard and Mathematica Policy Research found each $1 increase in the minimum wage was associated with a 14% increase in closures for median-rated restaurants.

Democrats claim the federal minimum wage and the people who earn it have been “stuck” since 2009. In fact, Bureau of Labor Statistics data show the number and percentage of people earning the minimum has dropped every year since 2010. Today, thanks to a tight labor market and tax reform, thousands of employers, including Amazon,Target , McDonald’s and Walmart , have voluntarily raised their base pay as high as $15 an hour—without the government mandate labor groups swore was necessary.