October 25, 2018
Instead of alleviating poverty, Seattle’s minimum wage experiment is creating a system of winners and losers. A new study from economists with the University of Washington show that Seattle’s recent minimum wage mandate is marginalizing workers still looking to establish … Continue reading
October 12, 2018
Amazon’s recent decision to raise its starting pay rate to $15 an hour–responsive, in part, to pressure from Vermont Senator Bernie Sanders–generated controversy from an unlikely group of protesters: The company’s employees. “Why Some Amazon Workers Are Fuming About Their … Continue reading
October 8, 2018
Come November, Arkansas will vote on Issue 5, a ballot initiative supported by “Arkansans for a Fair Wage”, which would hike the statewide minimum wage from $8.50 to $11.00 (a nearly 30 percent increase) by 2021. Behind the push for … Continue reading
About the Minimum Wage
The minimum wage is the minimum hourly wage an employer can pay an employee for work. Currently, the federal minimum wage is $7.25 an hour (part of the Fair Labor Standards Act) and some states and cities have raised their minimum wage even higher than that. Washington currently has the highest state minimum wages in the country at $11.50 per hour, and Emeryville, CA, currently has the highest city minimum wage at $15.69 an hour.
Employees that earn the minimum wage tend to be young, and work in businesses that keep a few cents of each sales dollar after expenses. When the minimum wage goes up, these employers are forced to either pass costs on to consumers in the form of higher prices, or cut costs elsewhere–leading to less full-service and more customer self-service. As a result, fewer hours and jobs are available for less-skilled and less-experienced employees.
Minimum wage increases do not help reduce poverty. Award winning research looked at states that raised their minimum wage between 2003 and 2007 and found no evidence to suggest these higher minimum wages reduced poverty rates. A new study from economists at the University of California, Irvine and the National Bureau of Economic Research find that over the past 30 years, increases in the minimum wage have not reduced poverty rates in disadvantaged neighborhoods. While the few employees who earn a wage increase might benefit from a wage hike, those that lose their job are noticeably worse off.
Employees who start at the minimum wage aren’t stuck there. Research found that the majority of employees who start at the minimum wage, move to a higher wage in their first year on the job.