May 25, 2017
In 2014, the nonpartisan Congressional Budget Office estimated, based on a review of 60 studies, that a $10.10 federal minimum wage would cost 500,000 jobs nationally. Economists from Miami University and Trinity University replicated the CBO’s methodology for a proposed $12 federal minimum … Continue reading
May 16, 2017
In a Mother’s Day post, Facebook COO Sheryl Sandberg’s called for a minimum wage increase. That’s easy for her to say. Her company wouldn’t be affected by the mandate that would disproportionately affect businesses with tiny profit margins. Facebook’s 2016 … Continue reading
April 19, 2017
At our sister site, Faces of $15, we’ve been documenting the “death march” of Bay Area restaurant closures due to dramatic minimum wage increases. Now a new Harvard Business School study provides additional analytical support to our observational findings. The study concludes that … 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. California and Massachusetts currently have the highest state minimum wages in the country at $10 per hour, and Emeryville, CA, currently has the highest city minimum wage at $14.82 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. 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.