Monday, February 24, 2014

Net Affects of Raising the Minimum Wage

It's not all "doom and gloom" as some billionaires and their millionaire cable news pundits in the media want you to believe (they're just trying to keep the man down).

Local Policies That Work for Workers (Nancy Folbre, professor at the UMass):

A poll conducted by CBS News in mid-January found that 72 percent of Americans favor raising the federal minimum wage to $10.10 an hour.

Variations in state policy provided a natural experiment, making it possible to evaluate employment growth among low-wage companies close to state boundaries where the minimum was raised on one side but not the other. The results showed no negative employment impacts.

Analysis of the same variations reveals significant reductions in employee turnover in the first nine months after a minimum-wage increase, a factor that increases efficiency and helps compensate for increased costs.

In 2004, San Francisco implemented a generous citywide minimum wage (currently $10.74 an hour). Yet as a recent article in Bloomberg Businessweek points out, local economic growth hasn’t suffered. Both overall private employment and employment among food service workers grew more rapidly there than in neighboring counties between 2004 and 2011.

The Impact of a Minimum-Wage Increase (Economist Jared Bernstein discusses the CBO report)

These are among the report’s key findings:

  • It estimates that 16.5 million low-wage workers would directly benefit from the proposed increase to $10.10 by the second half of 2016.
  • It estimates that the increase in the wage would reduce employment by about 500,000. That amounts to about 0.3 percent of total employment. [CBO says zero to a million as a ballpark guess, and 500,000 is used as the median number]

In the case of the minimum wage, on the benefits side of ledger, the budget office shows that 16.5 million low-wage workers would directly get a much-needed pay increase at no cost to the federal budget.

Though the budget agency did not analyze longer-term results for these workers, it’s also the case that when those displaced by the increase get their next low-wage job, they too will benefit from a higher paycheck than would otherwise be the case.

600 Economists Now Back A $10.10 Minimum Wage

The group, which includes seven Nobel laureates, attached their name to a letter released earlier this month by the Economic Policy Institute urging lawmakers to raise the minimum wage to $10.10 an hour.

The EPI letter, which requires one has a Ph.D. in economics in order to sign, aims to put that debate to rest. It states that the “weight of evidence” shows that “increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”

A minimum wage hike could also stimulate economic growth, the letter states, by putting more money in the pockets of those most likely to spend it immediately -- low-wage workers. A December EPI analysis found that raising the minimum wage to $10.10 an hour would boost the U.S. economy by $22 billion during the initial phase-in period, creating 85,000 jobs.

1 comment:

  1. --------//UPDATE

    House Democrats will file their "discharge petition" to force a minimum wage vote this week -- but they'll have a hard time getting the 18 or so Republican votes they need to pass it -- because the GOP doesn't want the rich to pay poor people a living wage.