Small Businesses Stand to Lose the Most in the “Fight for $15”

In his 2013 State of the Union, President Obama called for a 25 percent increase in the federal minimum wage, to $9 an hour. Five years later, and the Democratic Party is demanding a minimum wage increase of more than 100 percent, to $15 an hour.

The Service Employees International Union (SEIU) popularized the figure in 2012 as a part of an over $100 million campaign, the “Fight for $15.” The catchy sounding figure might make for good politics, but it has no basis in economics. According to a candid comment from an organizer with the union: “Ten dollars was too low and $20 was too high, so we landed at $15.”

In 2014, the nonpartisan Congressional Budget Office (CBO) estimated that 500,000 jobs would be lost nationwide if the federal minimum wage were raised to $10.10, and 100,000 would be lost if it were raised to $9.00. Economists from Miami and Trinity Universities, using the CBO’s methodology, found that a $15 minimum wage would wipe out up to 2 million jobs by 2020.

A new ad, created by The Employment Policies Institute and placed in The Hill, highlights the increased prices, cut hours, and business closures that follow in the wake of minimum wage hikes.

For more stories on dozens of businesses who have struggled with rising labor costs due to minimum wage mandates, visit

While the SEIU may think that a $15 federal minimum wage is not radical, business owners who disagree with the union have historical precedence on their side. Since the federal minimum wage was established in 1938, it has been an average of $7.40 an hour after adjusting for inflation, slightly higher than the current federal standard of $7.25Since the last increase in the federal minimum wage was fully phased-in in 2010, both the number and percentage of people earning it has fallen every year, as employees earn raises through their own initiative.

New Year, Same Bad Idea: Starting 2019 with 43 Minimum Wage Hikes

As the ball drops this New Year’s Eve, 43 states and municipalities across the U.S. will be implementing minimum wage hikes. The 20 states and 23 locales are listed below:

After taking these increases into account, sixteen municipalities will have implemented what has become a progressive litmus test – a minimum wage of $15 or higher.

California’s minimum wage will increase to $12.00 on January 1st, and by 2022, California will become the first state in the union to implement a $15 minimum wage. This radical minimum wage experiment has real-world consequences. Dr. David Macpherson of Trinity University and Dr. William Even of Miami University found that California’s statewide minimum wage hikes will have killed 400,000 jobs by the time they are fully implemented. This estimate is conservative, as it does not take into account the hodgepodge of municipal minimums dotting the landscape.  

This January, thirteen cities in California will observe minimum wage mandates. This means that in 2018, 24 separate municipalities administered wage hikes across the Golden State. A labor economist with UC Santa Cruz commented that these local policies “make a difference.” Unfortunately, that difference is often not one that policymakers intended.

A comprehensive study by economists Scott Adams and David Neumark proves that minimum wage increases – regardless of where they are tried – lead to employment losses for our least-skilled workers. Researchers arrived at this conclusion after summarizing research and analysis looking into the impact of living wage laws across nearly 100 cities and local governments.

Instead of being dressed to the nines this New Year, these states and municipalities will be reminiscing of the times before costly government mandates.

$15 Minimum Wage Too Radical, Even for Democrats

New data shows that a $15 minimum wage was considered too radical for Congressional candidates on the campaign trail. The Progressive Change Institute (PCI), a liberal organization, compiled a dataset of left-of-center policy positions taken by the soon-to-be freshmen legislators. While PCI says that 60 percent of the candidates campaigned on “raising wages/minimum wage,” only about one-third (20 out of 58 candidates) called for doubling the federal minimum wage.

What explains their hesitation in joining the Fight for $15? Start with the empirical evidence. Economists David Macpherson of Trinity University and William Even of Miami University analyzed how such a policy would impact California, which will be home to the first statewide $15 minimum wage in the country. They found that the “Fight for $15” could cause California a loss of 400,000 jobs by 2022. In the Bay Area and Seattle, experiments with a $15 minimum wage are backfiring in spectacular fashion, leading to a loss of work hours for employees and the closure of restaurants.

Congressman Bobby Scott, the ranking Democrat on the House Committee on Education and the Workforce, said that the newly Democratic House will hope to enact “something very similar” to his previous attempt at a $15 wage hike, the Raise the Wage Act. But if the survey data above is any indication, he’ll have a tough time getting support for that policy in his own caucus.

Minimum Wage Hikes Still Creating Winners and Losers

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 themselves in the Emerald City, while more experienced workers have seen modest income increases.

The economists also found that, in addition to slashing hours for the already employed, Seattle’s citywide minimum wage policy is creating “a significant reduction in the rate of new entries into the workforce.” – especially when compared to the rest of the state. The researchers arrived at these conclusions after receiving access to workforce data gathered by Washington state’s Employment Security Department.

Unfortunately, decision makers may have let grandiose visions – and not Seattle’s best interest – inspire the choice for a $15 wage hike. One council member remarked that “$15 in Seattle is just a beginning. We have an entire world to win.” Falling far short of a global, or “national game changer,” some workers have seen their “historic” wage increase essentially wiped out by lost hours.

This new analysis only adds to the growing mountain of empirical evidence that minimum wage mandates – regardless of geographic limitation – often hurt more than help. Researchers from American and Cornell Universities found that 28 state and federal minimum wage increases between 2003 and 2007 failed to reduce poverty.

While this study only had access to information from April 2016 to January 2017, decades of data shows that wage hikes limit opportunity. Policymakers should consult the experts before pushing for more policies that isolate the economically vulnerable.

99% of “Arkansans for a Fair Wage” funding from outside Arkansas

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 a government mandated minimum wage increase in The Natural State is a group with a natural sounding name, “Arkansans for a Fair Wage.” What is unnatural, is that 99 percent of their contributions come from out-of-state.

Furthermore, that 99 percent comes from D.C. based organizations, according to reports from the Arkansas Ethics Commission.

The Arkansas Secretary of State’s website requires committees to report contributions of $50 or more. “Arkansans for a Fair Wage” reported only five such donors, and only two were from Arkansas. One of the two donors living in Arkansas just so happens to be the attorney organizing the petition drive. This information pokes holes in the implicit assumption that the people of Arkansas are for minimum wage hikes.

The D.C. based Sixteen Thirty Fund gave $450,000 to “Arkansans for a Fair Wage”, by far the group’s largest contributor (almost 75 percent of their total funding). The deep-pocketed Sixteen Thirty Fund has also contributed over $4 million to another “local” organization called Raise Up Missouri – which begs the question, where is all their money coming from?

The Sixteen Thirty Fund is not required to disclose their donors. Unions, on the other hand, are required by federal law to publicly disclose how they spend their members’ money. According to public documents, unions gave the Sixteen Thirty Fund over $2.2 million in 2017. We will not know how much the Fund received from unions in 2018 until the end of the year, and after the vote on Issue 5.

Voters should be skeptical of groups who claim to speak for local residents, when their funding suggests otherwise.

Companies are voluntarily raising wages without imperiling jobs in the process

Amazon’s announcement of a $15 starting wage continues a trend of major companies, including Target and WalMart, voluntarily raising their minimum wage. Unfortunately, this positive development was soured by news that it would lobby for an increase of the federal minimum wage, which would cause business closures, job losses, and slashed hours across the country.

Amazon has no excuse to be ignorant of these negative impacts. In their hometown, Seattle’s $15 mandate has caused employees to lose $125 a month, on average, from lost work hours, in addition to thousands of fewer entry-level jobs. The story is similar in San Francisco, the first major city to mandate a $15 minimum wage hike. Home to a once vibrant restaurant community,  economists from Harvard Business School, using data from Yelp, identified a 14 percent increase in Bay Area restaurant closures associated with each one dollar increase in the minimum wage.

Activists interested in securing wage increases should know that employees are already earning them. A study by economists from Miami and Florida State Universities disputes the claim that minimum wage employees need government intervention for wage increases. Almost two out of every three minimum wage employees will receive a raise within a year of starting, and the share of employees earning the minimum wage tends to decrease in the years following minimum wage hikes (only 2.3 percent of workers earn the minimum wage – this number has been decreasing since 2010).

Amazon’s senior vice president for global corporate affairs, who happens to be the former Press Secretary for President Obama Jay Carney, said Amazon would push for a minimum wage increase that will have a “profound impact” on people and families from coast to coast. Hopefully Congress will see that what doesn’t work in Seattle and San Francisco is unwanted in Shreveport and Sioux Falls.

The Dark Money behind Missouri’s Minimum Wage Push

This November, Missouri voters will have the option to vote “yes” or “no” on proposition B, a ballot initiative that would increase the state’s minimum wage from $7.85 to $12.00 in 2022 (a 52 percent increase). The “local” group supporting this initiative, “Raise Up Missouri”, isn’t very local after all – 87 percent of its funding coming from dark money organizations based in New York and Washington D.C.

Raise Up Missouri has received a total of $5,107,930 in named contributions. Of this, $4,480,000 has come from out-of-state, with only $627,000 (12 percent) coming from Missouri based individuals or organizations.

The east coast funding apparatus behind “Raise Up Missouri” is headlined by the D.C. based 501(c)4 organization called the Sixteen Thirty Fund. According to reports from the Missouri Ethics Commission, the Fund has given over $4 million to Raise up Missouri, including this $3 million check from August 31st.

It’s difficult to know who’s funding the Fund; donations to the Sixteen Thirty Fund are anonymous. At least some of the money comes from labor unions: An article in the Washington Free Beacon last year reported that the group has received over $860,000 from four labor unions in from 2015 to 2016, and federal filings show that this number rose to $2,235,000 in 2017. We won’t know the extent of their 2018 funding until the end of the year.

Looking past the dark money funding the minimum wage mandate, voters should know what the actual cost of a minimum wage mandate would be. A Missouri based think tank, the Show-Me Institute, recently released a study conducted by economists William E. Even of Miami University and David A. Macpherson of Trinity University which finds that approximately 11,000 workers would lose their jobs if the proposed minimum wage mandate is implemented.

Other Key highlights include:

  • 32 percent of hourly workers who would receive a wage increase under the proposed hike would be individuals living at home with their parents.
  • Only 19 percent of the workers who would receive a wage increase are in families with incomes below the poverty line.
  • Only about 10 percent of workers who would receive a wage increase are single parents.

Proposition B is a poorly targeted policy proposal. No amount of money from out-of-state advocates can justify the economic costs Missouri will endure if it passes in November.

Previous evidence of minimum wage harm refutes biased study

A recent study from researchers with U.C. Berkeley’s Institute for Research on Labor and Employment suggests that cities which have implemented a higher minimum wage have seen “no significant negative employment effects.” This is just the latest flawed report from a team of researchers who’ve been exposed as working directly with labor advocates (and sometimes being funded by labor) to support the push for a higher minimum wage. Readers should both be skeptical about the bias of the study and know that mountains of research conducted on the effects of raising the minimum wage prove how harmful minimum wage mandates can be.

There have been multiple occasions where ties have been revealed between the Berkeley labor center and labor unions pushing their own agenda. A 2016 expose in the Albany Times Union, based on hundreds of pages of emails, showed that the Berkeley team was taking its talking points and agenda from labor groups. In some instances, the article reported, “the relationship between academic and funder seemed explicit…” Last year, the same Berkeley team was coordinating its “research” services to back up the political agenda of the Seattle Mayor’s office, after a neutral study on the city’s $15 minimum wage experiment showed less-than-stellar results. Seattle Weekly even headlined an article explaining the unseemly set: “The City Knew the Bad Minimum Wage Report Was Coming Out, So It Called Up Berkeley.”

More-credible studies from neutral third parties analyzing the effects of city minimum wage increases have shown that business closures, job loss, and a reduction in pay are all occurring from minimum wage hikes. Harvard Business School and Mathematica Policy research showed that every one-dollar increase in the minimum wage in the Bay Area has led to a 14 percent increase in closures for median rated restaurants. The Seattle-supported team of University of Washington researchers showed that Seattle’s minimum wage increase caused affected workers to see such a steep decline in work hours that they lost about $125 a month on average.

Ideology Over Evidence in the “Fight for $15”

Democratic Socialist candidate for Congress Alexandria Ocasio-Cortez, a rising star on the left, supports nearly doubling the federal minimum wage to $15 an hour. In a visit to her previous employer, she demonstrated why this policy is such a bad idea.

The Coffee Shop has been a cornerstone of NYC pop culture for almost 30 years, but recently announced that rising costs and minimum wage mandates were too burdensome to stay in business. This week, Ocasio-Cortez stopped by The Coffee Shop to reflect on her experiences there, and remind her Twitter followers that she is “a normal, working person who chose to run for office, because I believe we can have a better future.”

The Coffee Shop’s 150 employees are now facing an uncertain future, not a better one. As the owner explained, he was forced to close: “The times have changed in our industry … The rents are very high, and now the minimum wage is going up, and we have a huge number of employees.”

This experience isn’t rare to New York, and neither is Ocasio-Cortez’s ignorance on the topic. Appearing on the Daily Show, Ocasio-Cortez cited a study by economists at Berkeley while attempting to frame Seattle’s $15 minimum wage experience as a success story. In reality, the Berkeley study was a political stunt. After a city-commissioned independent study from the University of Washington found that Seattle’s minimum wage hikes led to decreases in hours and employment for low-wage workers, Seattle’s Mayor (an ardent supporter of minimum wage hikes) worked with the Berkeley professors to produce “results” that would better support his political goals.  

Pursuing public office to advance an agenda is not new. Unfortunately, politicians pushing ideology without evidence isn’t either. As the Employment Policies Institute’s Michael Saltsman told the Free Beacon, “It’s fine to mourn the impending closure of your former employer—it’s better to understand the misguided minimum-wage mandates that contributed to that closure.”

New project highlights teenagers struggling to find work

Today, the Employment Policies Institute (EPI) launched a new web project featuring the stories of more than six dozen teenagers around the country who’ve been unable to find work for the summer. The stories, collected through Facebook, highlight the difficulties today’s youth face while attempting to enter the labor force.

These teenage applicants were often frustrated with employer feedback that highlighted a need for experienced applicants:

  • Amailah W (Brooklyn, NY): “I have looked for jobs, however none of them would accept youth, only those with experience.”
  • Nikita F. (Chicago, IL): “Nobody wants to hire you because [you’re too] young or you don’t have experience”
  • Brain L. (San Diego, CA): “It’s ironic because how can I get experience if no one wants to hire me?”
  • Estel C. (Sacramento, CA): “I’m a teen looking for a job and it’s especially harder with no previous work experience but I really want to find a summer job!”

While Bureau of Labor Statistics data show that the teen unemployment rate is near historic lows, there are nearly 11 million teens who’ve dropped out of the labor force (or never entered it). According to a study by authors David Neumark and Cortnie Shupe, rising state and local minimum wages have been a “predominant factor” in the decline. The new project featuring teenagers’ struggles to find a summer job will supplement existing academic research and expand upon EPI’s “Faces of $15” website. “Faces of $15” profiles over 100 business owners who have also been harmed by rising minimum wages.