has long been a hypothetical question may soon become a
real one: What would the national economy look like with
a $15-an-hour minimum wage?
activists and politicians see a $15 minimum wage as the
antidote to the ills of rising inequality, a way to
reduce poverty and stimulate the overall economy.
Business owners warn it will tie their hands in
downturns, drive small employers out of business and
lead to millions of layoffs.
reality is not that simple: An increase to $15 an hour
would ripple through the U.S. economy in some unexpected
ways that are, generally, not as bad nor as beneficial
as each side claims.
push for a higher minimum wage has gained momentum over
the past few years. Seattle, San Francisco and most
recently Los Angeles have adopted a floor of $15 an hour
to take effect over the next few years. Thatís more
than double the current federal minimum-wage law of
cities such as Chicago, Oakland, Calif., and Washington,
D.C., have raised the minimum wage, but not as much. At
least a dozen other cities and states, including New
York and Oregon, may soon follow.
recent movement is rooted in years of stagnant wages and
a general disaffection from the slow and uneven recovery
since the Great Recession officially ended in 2009. Like
the Gilded Age in the late 1800s, the last
quarter-century has seen fabulous income gains for
corporations and individuals at the top, but very little
for everybody else.
true that higher minimum wages would address some of
that inequality, lifting many Americans from poverty.
60 percent of workers who are paid on an hourly basis
ó some 44 million people ó currently make less than
$15 an hour, Labor Department figures show. If the
minimum went up to $15 tomorrow, nearly half of those
workers would get at least a 50 percent bump in pay.
itís not just teenagers and young adults who would
benefit. More than 8.4 million people earning less than
$10 an hour today are in the prime of their work life,
between ages 25 and 54. About 62 percent of these
workers are women, many with children.
the benefits from higher wages would be offset for many
by a reduction in government benefits that low-wage
workers now receive, such as child-care subsidies or
public aid for food, housing and medicines.
of workers would have more money in their pockets to
spend, boosting demand for goods and services. But they
would also likely face increased prices in the
marketplace as retailers, restaurants, child-care
centers and other businesses that employ low-wage
workers shift the higher labor costs to their customers.
Oaklandís minimum wage jumped from $9 an hour to
$12.25 in March, residents noticed many stores tacked on
a dime or a quarter to an assortment of items. Creole
food caterer David Smith went further, jacking up the
price of his dishes by $2 to $3 a plate. "I had
to," says Smith, 35, who has three employees.
term, many low-paid workers could lose their jobs or
find fewer openings as employers cut back to cope with
the higher wage requirements.
analysis by the nonpartisan Congressional Budget Office
last year estimated that raising the minimum wage to
$10.10 an hour, which some lawmakers had proposed, would
result in a half-million jobs lost. At $15 an hour, the
hit would likely be in the millions.
dollars still scares me," says Harry Holzer, a
Georgetown University economist, adding that what might
be doable in high-priced cities like Seattle and San
Francisco could prove more difficult in other areas.
doubt higher wages will push some struggling companies
into bankruptcy, especially smaller ones that operate on
other businesses will do just fine, maybe even thrive,
with improved productivity and greater sales generated
as weaker rivals fold and consumers pump more money into
businesses will adapt by outsourcing more. Others will
try to speed up automation and substitute labor with
machines, shrinking lower-wage jobs in the process but
also adding some higher-paying ones to handle new
all of these competing forces play out is anybodyís
guess. But as the push for higher minimum wages spreads,
workers and employers are already beginning to envision
life in a $15-an-hour world.