It’s amusing to think that it wasn’t long ago that conservatives like myself would rhetorically argue against the minimum wage that “if $10 an hour is so good, why not $15 an hour, or $20, or $50?” in an attempt to get the proponent to realize there’s a point in which artificially higher wages cost jobs. Unfortunately, liberals seem to have heard the question and instead thought to themselves”great idea!”
The “Fight for Fifteen” quickly went from being a laughing stock to a serious movement on the left (while remaining a laughing stock to us), and had successes in a convincing a handful of cities and seven states raise or pass legislation that will eventually raise their minimum wages to $15 an hour. Granted, while the inflation adjusted value of a $15 wage today is $13.40 in 2012 dollars (the year the Fight for Fifteen movement began), they still achieved a massive increase in the minimum wage in those places.
But for some, more than doubling the minimum wage isn’t enough. Tripling is the new doubling.
As Fox Business’ Megan Henney reports: Presidential candidate Tom Steyer vowed to call for a $22 hourly minimum wage if he wins his longshot bid to unseat incumbent President Trump in November. He made the announcement during a campaign block party on Sunday while campaigning in South Carolina, according to The Associated Press. Progressive candidates Elizabeth Warren and Bernie Sanders have released competing plans to hike the minimum wage to $15 per hour.
No studies even exist that quantify what the consequences would be of tripling the minimum wage – only doubling it.
A 2017 study conducted by the University of Washington found that Seattle’s minimum wage law reduced hours by 9 percent, which caused earnings to fall on net by 6 percent. And the kicker? That study was conducted when Seattle’s minimum wage had “only” risen from $10.50 to $13 an hour, as the $15 wage was phased in gradually. And despite that $2.5 an hour raise at the time of the study, workers were still $125 a month worse off due to the reduced hours and benefits. One must also keep in mind that due to the cost of living being much higher in Seattle than the national average, any negative consequences of a $15 minimum wage would be much worse in cheaper areas. While those who kept their jobs managed to see an average pay cut despite the wage increase, things were much worse off for the 5,000 workers who lost their jobs entirely.
Additionally, a Congressional Budget Office report from July 2019 found that a $15 minimum wage would cost roughly 1.3 million jobs – but that it could be as many as 3.7 million.
Another overlooked cause of the minimum wage is that because it makes it more difficult for the low skilled to find work, many drop out of the labor force entirely.
A study published in 2001 at North Carolina State University by Dr. Walter J. Wessels looked at past minimum wage hikes, finding that hikes from 1978-1981, finding that they reduced teen labor force participation by 3.62 percentage points, 1990-91 hikes by 2.07 percentage points, and 1996-97 hikes by 1.31 percentage points. I’m using the youth as a proxy for the low-skilled, and you can see the effects for yourself graphically:
A $15 minimum wage was a very bad idea – $22 is a catastrophic one.
And if history is our guide, the second a $22 minimum wage would take effect the calls for a $50 minimum wage would begin.