ó Exhaustive research over the past few decades
suggests raising the minimum wage has little negative
impact on overall employment.
is, most past wage hikes have been relatively modest,
and thereís no data to confidently predict what might
happen following the kinds of increases now planned in
California and New York.
to $15 an hour represents a 50 percent rise from
Californiaís current minimum pay of $10, and a 67
percent jump for New York.
these would be phased in over several years and would
not apply statewide in the case of New York, the sheer
size of the increases has made even proponents of higher
minimum wages a little worried.
a grand experiment with potentially profound
consequences ó some good, some bad ó that could
extend far beyond the borders of the nationís two
largest states, with ramifications for the health and
direction of the U.S. economy and society.
minimum wage debate hints at the very essence of who we
are, how we function together and what weíll
become," said Arthur Laffer, the well-known
economist who served as an advisor to President Reagan.
what some experts are expecting:
MAY INCREASE UNEMPLOYMENT AMONG MINORITY YOUTH
teenagers and young adults hold a disproportionately
large share of low-wage jobs, they figure to be among
the hardest hit, pushed out by older and better-educated
workers who will be drawn by the higher pay offered by
retail stores, food services and other businesses.
could hurt opportunities, especially for black
teenagers, one of the most vulnerable groups in America.
The unemployment rate for African Americans ages 16 to
19, while down by almost half from 2010, still stands at
25 percent. That compares to 13.9 percent for white
youth and 15.6 percent for Latino youth.
policymakers blame high crime in cities such as Chicago
on steep poverty and unemployment, Laffer asked, should
they still advocate for a high minimum wage that might
reduce jobs for the youth and exacerbate social
side effect of higher minimum wages may be that
teenagers will be "induced to leave school,
interrupting or prematurely ending their formal
education," write researchers Dale Belman of
Michigan State University and Paul Wolfson of Dartmouthís
Tuck School of Business.
they added that research findings about the impact on
schooling and minority youth are not conclusive enough
to be used by policymakers.
DISPARITY WITHIN STATES WILL SHRINK
is little doubt that the new minimum wage laws in
California and New York will help reduce the increasing
disparity in earnings between the highest and lowest
paid workers in those states.
California, the bottom 10 percent of wage earners made
on average $9.48 an hour last year, a 20 percent
increase since 2005, unadjusted for inflation. Workers
in the top 10 percent of wages earned on average $53.08
an hour, a 35 percent jump from 2005, according to data
from the Bureau of Labor Statistics.
upshot is that the difference between the bottom and top
10 percent of wages in the state has widened over the
past decade, to $43.60 an hour from $31.35. The trend is
almost exactly the same for New York.
minimum wages set to rise steadily in the years to come,
and during a period when inflation is forecast to stay
historically low, low-wage workers "will achieve a
much higher level than they ever have, and that will
reverse decades in which wages have been stagnant or
falling at the bottom of the distribution," said
Michael Reich, chair of UC Berkeleyís Institute for
Research on Labor and Employment.
going to provide people, not with security, but with
fewer headaches," he said. "If their car
breaks down, they might have money to repair it or buy a
used car, which will help them get to work, to child
care and so on."
it should help children in the long run too, Reich said.
"We know that higher income leads to better
parenting, better mental health and better school
RED-STATE, BLUE-STATE DIVIDE COULD GET WORSE
dramatic differences in minimum wages soon to be paid
across the country could worsen the income gap between
rich and poor states.
a fissure that has generally narrowed over most of the
past century, according to Andrew Gelman, a statistician
at Columbia University and author of "Red State,
Blue State, Rich State, Poor State."
is generally the richer, Democratic-leaning states,
including Maryland, Massachusetts, Washington and
Oregon, that have pushed through higher minimum wages in
recent years and are candidates to follow California and
New York by adopting a statewide $15-an-hour floor.
of the 21 states with minimum wages equal to or less
than the federal rate are in the so-called Red or
Republican-leaning states in the South and the Great
distinction matters not just for politics, but in their
different approaches to regulation and the economy ó
differences that appear to be getting sharper with such
policies like "super-minimum wage laws," as
analysts at the conservative Heritage Foundation call
the higher-wage laws.
is a similar divide when it comes to which states have
embraced President Obamaís expansion of Medicaid for
the poor, giving poor residents in Democratic-led states
better access to health coverage than their counterparts
in Republican-led states.
Florida, an urban development expert at the University
of Toronto, sees the $15-an-hour minimum wage push as an
indication of the increasing polarization in America in
which there are competing visions: one driven by people
in large, dense metropolitan areas with a strong
information economy, and the other by folks in rural
regions more dependent on resources and real estate.
are being ever more sorted by class, by income, by
education, by occupation and by political
orientation," he said.
LOW-PAYING JOBS WILL GO UNDERGROUND
lot more are going to get hired off the books,"
especially immigrant workers, said Harry Holzer, a
public policy professor at Georgetown University.
Labor Departmentís top economist in the Clinton
administrationís second term, Holzer never imagined
that the campaign for $15 an hour would actually
succeed. He thought $15 was more of a bargaining ploy to
get to $10 an hour, or maybe $12.
Holzer fears there will be heavy job losses, hurting
most the low-skilled, less-educated workers who may have
to accept cash under the table or cut deals to keep
work isnít necessarily illegal or bad. It includes
jobs such as babysitting and housecleaning that provide
much-needed side incomes or can introduce a young person
to the world of work, Demetra Smith Nightingale and
Stephen A. Wandner wrote in an Urban Institute paper.
a rise in informal work translates into more tax
avoidance and generally means fewer worker benefits and
protections, like unemployment insurance.
such, a higher minimum wage may backfire for some
low-income workers unless there also are changes that
encourage workers and employers to do things by the