High Price of Hiking the Minimum WageOn Aug 24, 2015 Latest updates
According to a new report by American Action Forum and the Manhattan Institute, hiking the minimum wage nationally to $12-$15 an hour — as SEIU is demanding — would hurt the poor and cost millions of jobs.
The report, titled, “Counterproductive: The Employment and Income Effects of Raising America’s Minimum Wage to $12 and to $15 per Hour,” looked at income, employment and the impact on the workers themselves. In each category, the report finds increasing the minimum wage to $12 or $15 an hour is likely to result in adverse consequences. For income, the report argues, raising the minimum wage will actually lower total national income levels.
“The earnings gained for those who would keep their jobs would be outweighed by the earnings lost by those who would become jobless,” the report detailed. “As a result, the net income gains tend to be smaller or more negative when using the annual earnings approach than when using the wage approach.”
Likewise, when it comes to employment, the report found problems well. The reason total income levels fall on the national level is because there are less jobs opportunities. This is because the increased costs of labor under an increased minimum wage makes businesses less likely to hire as many employees.
“While a minimum-wage hike would benefit millions of workers with higher earnings, it would also hurt millions of others who would lose earnings because they cannot attain or retain a job,” the report argued. “Our estimates show that raising the federal minimum wage to $12 per hour by 2020 would affect 38.3 million low-wage workers.”
Finally, for the workers themselves, the report argues low skilled and entry level workers will be the ultimate victims. Such workers will be the least likely to keep or get a job under such a policy. This is because they don’t have the skills to be able to make the business as much money as an more skilled worker could in an hour. Such an outcome will be particularly troublesome considering such workers are usually the ones minimum wage increases are supposed to help…
“We estimate that 3.3 million to 16.8 million fewer low-wage jobs would exist in 2020 if policymakers increased the federal minimum wage to $15 per hour,” the report also noted.