Everyone loves a fun party game/icebreaker. Test your knowledge of the federal minimum wage. Can you tell which of the following statements is NOT true about raising the federal minimum wage to $15 an hour?
A. It would not cost any jobs.
B. Only a tiny fraction of all working women earn minimum wage, so this would not have a huge positive impact on all women.
C. Real family income would fall overall.
Let’s take each statement one at a time.
A. LIE! The nonpartisan Congressional Budget Office (CBO) estimated that a $15 per hour federal minimum wage would kill 1.3 million to 3.7 million jobs, even as it raised wages for millions of workers. Another estimate pegs losses even higher at 7 million full-time jobs. Most literature on the subject of minimum wage increases agrees that they reduce employment. Nearly doubling the federal minimum wage from its current level of $7.25 per hour would make it more expensive for companies to hire and retain their lowest-skilled workers. Employers could forgo hiring new workers and lay off current staff, but that’s not all. They may also reduce staff hours and cut benefits well as raise prices on the goods and services they provide to consumers. In addition, they may also invest in automation and technology to replace workers. All of this makes it more difficult for inexperienced workers to build skills and gain valuable experience.
B. TRUE! According to the Bureau of Labor Statistics, less than 3 percent of women earn at or below the federal minimum wage. While we do want to help men and women struggling to make ends meet, we also realize that most minimum wage workers are not making a career out of these entry-level jobs but using them as springboards to better-paying positions. Two out of three minimum wage workers earn a raise within their first 12 months on the job. When we raise the minimum wage we risk killing valuable starter jobs for women who are looking to gain skills and move up the ladder.
C. TRUE! The CBO finds that total real family income could fall by $9 billion in 2025. Real income earnings for lowest wage earners would rise, but they be more than offset by income losses for unemployed workers, business owners, and consumers. Although it’s true that millions of workers would benefit from higher wages, and perhaps a million families would move out of poverty, many others would lose incomes, lose businesses, and lose jobs. Those are tradeoffs that majorities of Americans may not be willing to make as public support for a $15 minimum wage plummets when they learn of the economic impacts.
As many Americans struggle and experience real wage loss due to the rampant inflation, raising the federam minimum wage is not the answer. Our lawmakers need to rein in the rampant government spending and find practical ways to reduce inflation, not raise the minimum wage.