Debate Desk
Would a $15 Federal Minimum Wage Really Help Low-Wage Workers?
A $15 floor would raise pay for many workers while pricing some out of jobs, and the right wage differs between a small town and a big city.
The claim
Supporters of a $15 federal minimum say the $7.25 floor has not moved in years while prices have, that no one working full time should live in poverty, and that studies of past increases show little job loss. A higher floor, they say, puts money in the pockets of people who will spend it.
The answer in three points
- A minimum wage is a price control on labor. Raise it above what a worker's output is worth to an employer and some jobs disappear, hours shrink, or training and benefits are cut to compensate. The people hurt first are the least experienced.
- One national number cannot fit the whole country. Fifteen dollars is a modest wage in some high-cost cities and an enormous raise in a low-cost rural county where the typical wage is far lower. States and cities can set their own floors and already do.
- If the goal is to raise the income of working families, wage subsidies and a larger earned income tax credit do the job without pricing anyone out of a position. Reasonable conservatives differ on whether any federal floor should rise, but almost all prefer targeted help.
The core point is that a single number set in Washington applies to a coal town and to a coastal city alike. Wages in places where living costs are high have moved up by themselves and through state law. Where they have not, the cause is usually low productivity, and the cure is skill and investment, which a mandate does not supply. Anyone who has run a small shop knows the arithmetic: a wage is paid out of what the worker brings in.
The numbers
- The federal minimum wage has been $7.25 an hour since July 2009, according to the U.S. Department of Labor.
- The Congressional Budget Office's 2021 analysis of a $15 minimum by 2025 estimated it would reduce employment by about 1.4 million jobs while lifting roughly 900,000 people above the poverty line.
- A University of Washington study of Seattle's 2016 increase, published in 2017, found that hours worked in low-wage jobs fell enough to cut average monthly earnings for affected workers.
What they will say next
"Studies show small increases cost no jobs." Small increases in a strong labor market may. The question is the size of the step relative to local wages. A step that is large against the local median will show job loss, which is why the CBO's own range for $15 included a large downside.
"Corporations can afford it." Many minimum-wage employers are small firms with thin margins, and large employers can respond with automation or fewer hours. The cost lands on the worker whose hours are cut.
"The wage hasn't kept up with inflation." True for the federal floor. But most of the country already pays above it, because most states set their own higher rate. That is evidence the market, and the states, adjust without Washington.
"A higher wage reduces turnover and pays for itself." Sometimes it does for a firm that was underpaying. But the claim cannot hold across thousands of different businesses at once. If higher wages always paid for themselves, employers would already be paying them, and no law would be needed.