Playing politics with thousands of jobs

Minimum Wage Threat

Proponents say that boosting the minimum wage will reduce poverty without reducing jobs. However the academic evidence paints a very different picture: According to economists at the Federal Reserve Board and the University of California-Irvine, the majority of empirical research shows that a higher minimum wage reduces employment for the least-skilled while having little to no effect on poverty rates. 

This is supported by research from economists from San Diego State and Cornell University who studied four decades of data that raised minimum wage has no associated reduction in poverty. In fact, this study finds that minimum wage hikes after the Great Recession generally “fail to uncover poverty-reducing effects.” The risks associated with the most recent minimum wage proposals – $15, $17, and the elimination of tip credits – are outlined below.

$15 Minimum Wage

The $15 minimum wage proposal has recently gained traction – largely due to the Fight for $15 movement. But even a top organizer for the SEIU has admitted that this unprecedented number was pulled out of thin air. In his words, “$10 was too low and $20 was too high, so we landed at $15.”

A new survey conducted by CorCom Inc. and Carnegie Mellon University asks economists about their reaction to a $15 minimum wage. It finds that 62 percent of U.S.-based economists oppose a $15 federal minimum wage. 

The survey asks several additional questions that shed light on this topline finding. Three-quarters of respondents (75%) said that a $15 federal minimum wage would have harmful effects on youth employment levels. And 81 percent of respondents said that a $15 minimum wage would make it more difficult for small businesses to stay in business.

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$17 Minimum Wage

Senator Bernie Sanders has introduced legislation to increase the federal minimum wage to $17 an hour, despite his former $15 minimum wage failing, even amongst his own party. A large majority of economic research and American labor economists have agreed this proposal would have significant negative consequences for minimum wage employment.

Research conducted by economists from Miami and Trinity University found that as many as 1.2 million jobs could be lost with a $17 minimum wage. Sixty-two percent of job losses will be among women, and 63 percent will be lost among 16-24 year olds. And the restaurant and bar industry will account for 40% of total job losses, and a quarter of these will be jobs held by tipped workers.

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Tip Credit Elimination Threat 

Political organizations like One Fair Wage have been working to eliminate the tipped minimum wage. These organizations are supposedly fighting for tipped workers, when the reality is that a tip credit ban would ultimately harm tipped workers and restaurants. 

Economists from the University of California-Irvine found that for every $1 increase in the tipped minimum wage causes 6.1% job loss for tipped restaurant employees. Research conducted by economists from Miami and Trinity University found that the elimination of tip credit nationwide could cut over 280,000 jobs. The nation will also see a $2.1 billion decrease in earnings. A Cornell University study indicated that as tipped minimum wages are increased, tipping percentages decline. 

Tipped workers have continued to rally to save their tips in Maryland, Maine, Michigan, and New Mexico. 

Continue reading on MinimumWage.com and ServiceChargeFacts.com