Larry Elder12:00 AM | April 10, 2024
On April 1, the new California $20-per-hour minimum wage for fast-food workers went into effect. In signing the bill, California Gov. Gavin Newsom rejected the view that such a wage hike -- 25% above the state's current minimum wage -- hurts teenagers who disproportionately benefit from fast-food jobs and for whom this becomes their entry into the job market. Newsom said: "That's a romanticized version of a world that doesn't exist. We have the opportunity to reward that contribution, reward that sacrifice and stabilize an industry."
In 2019, The New York Times editorial board echoed the theme:
"The simplistic view that minimum-wage laws cause unemployment commanded such a broad consensus in the 1980s that this editorial board came out against the federal minimum in 1987, calling it 'an idea whose time has passed,' and citing as evidence 'a virtual consensus among economists.' The old critique is still put forward regularly by the restaurant industry and other major employers of low-wage workers ...
"A groundbreaking study published in 1993 by the economists David Card and Alan Krueger examined a minimum-wage rise in New Jersey by comparing fast-food restaurants there and in an adjacent part of Pennsylvania. It found no impact on employment."
The 2019 New York Times editorial board has done a 180-degree turn from what its board wrote in a 1987 opinion headlined "The Right Minimum Wage: $0.00":
"... there's a virtual consensus among economists that the minimum wage is an idea whose time has passed. Raising the minimum wage by a substantial amount would price working poor people out of the job market ...
"A higher minimum would undoubtedly raise the living standard of the majority of low-wage workers who could keep their jobs. That gain, it is argued, would justify the sacrifice of the minority who became unemployable. The argument isn't convincing. Those at greatest risk from a higher minimum would be young, poor workers, who already face formidable barriers to getting and keeping jobs."
In a 1973 interview, Nobel economics prize winner Milton Friedman said, "I've often said the minimum-wage rate is the most anti-Negro law on the books."
Now the "groundbreaking" Card-Krueger study referred to in The New York Times 2019 editorial did, in fact, refute the consensus among economists that government-imposed minimum wage increases cause unemployment and higher prices and give added incentive to cut labor costs through automation. But about the study, The New York Times' own columnist, economist and Nobel winner Paul Krugman, wrote:
"Indeed, much-cited studies by two well-regarded labor economists, David Card and Alan Krueger, find that where there have been more or less controlled experiments, for example when New Jersey raised minimum wages, but Pennsylvania did not, the effects of the increase on employment have been negligible or even positive. Exactly what to make of this result is a source of great dispute. Card and Krueger offered some complex theoretical rationales, but most of their colleagues are unconvinced; the centrist view is probably that minimum wages 'do,' in fact, reduce employment. ..." (Krugman now supports a minimum wage.)
Other economists attacked the "groundbreaking study" noting that its researchers simply asked employers whether they hired more or fewer workers post the minimum wage hike. When, however, the same employers were asked to provide payroll records, it turned out the state with the higher minimum wage saw lower employment relative to the adjacent state that did not raise its minimum wage. This confirmed the consensus view that those hurt the most are the so-called unskilled, and that many of these would-be workers are the very black and brown liberals like The New York Times editorial board purports to care about.
Ohio University economist Lowell Galloway examined the study and denounced it: "The Card-Krueger study is still cited because it is useful politically. ... It still has legs because the minimum-wage notion is an idea that just will not die. You cannot put it to rest by any amount of evidence demonstrating its problems. Whenever people want to believe something strongly enough, any study that supports that belief -- no matter how bad it is -- will be accepted." But enough about Gov. Newsom and The New York Times.
Larry Elder is a bestselling author and nationally syndicated radio talk-show host. To find out more about Larry Elder, or become an "Elderado," visit www.LarryElder.com. Follow Larry on Twitter @larryelder. To read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at www.creators.com.
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FAQs
Minimum wage hikes result in fewer jobs, fewer hours, fewer benefits, and less consistent hours. Minimum wage increases also destroy teen job opportunities and cause prices to rise.
What state has the lowest minimum wage? ›
These states and territories have the lowest minimum wage rates in the U.S.:
- Georgia: $5.15.
- Wyoming: $5.15.
- West Virginia: $8.75.
- Minnesota: $8.85 (for small employers, or those with an annual gross revenue of less than $500,000)
- Puerto Rico: $9.50.
Opponents of raising the minimum wage believe that higher wages could lead to inflation, make companies less competitive, and result in job losses.
What are the cons to raising minimum wage? ›
Although the goal is to improve workers' lives, raising the minimum wage might make it harder for some people to find work and could worsen unemployment and increase unemployment in certain industries.
Who is most affected by the minimum wage? ›
It is also important to note that the impact of a higher minimum wage is greater for women than for men because low-wage women have lower wages ($4.50) in the absence of a new minimum. The minimum wage also has its greatest effect on those who have not completed high school (“Less than High School”).
Who benefits from a higher minimum wage? ›
Multiple studies conclude that total annual incomes of families at the bottom of the income distribution rise significantly after a minimum wage increase. 26 Workers in underpaid jobs and their families benefit the most from these income increases, reducing poverty and income inequality.
What is the average yearly pay in America? ›
How much does the average American make a year? According to the U.S. Bureau of Labor, the average U.S. annual salary in Q4 of 2023 was $59,384. This is up 5.4% from the same time period in 2022 when the average American was making $56,316 per year.
What is the average hourly wage in the United States? ›
What is the average hourly wage in the United States? According to the U.S. Bureau of Labor Statistics, the average hourly wage of United States citizens as of December 2020 is $29.81, while the average weekly wage is $1034.41.
Which US city has the highest minimum wage? ›
Typically, this means that state trumps federal, and city trumps state. Tukwila, WA, has the highest municipal minimum wage at $20.29 for companies with over 500 employees, while Washington D.C. has the highest state/territory minimum wage at $17.
Would raising minimum wage reduce poverty? ›
The higher federal minimum wage would also lift some 400,000 workers out of poverty, according to the CBO study. At the same time, the average estimate is that about 700,000 workers would lose their jobs. The median estimate is a reduction of 500,000 workers.
Position: Minimum Wage Does Not Increase Inflation
Employers, forced to pay more in wages, may also end up hiring fewer workers, which can lead to higher unemployment because those workers who were perhaps willing to work for lower wages are not hired.
Do higher wages cause inflation? ›
Wage increases cause inflation because the cost of producing goods and services goes up as companies pay their employees more. Companies must charge more for their goods and services to maintain the same level of profitability to make up for the increase in cost.
What are 3 arguments for raising minimum wage? ›
Some economists argue that increasing the minimum wage encourages consumer spending, helps families out of poverty, and boosts tax revenue while reducing tax-funded government assistance.
Is minimum wage meant to be a livable wage? ›
MYTH ONE: “The minimum wage was never meant to be a living wage. It's primarily for young people starting out.” FALSE. The minimum wage was established to ensure that jobs pay enough to support families. For many years it was set at about half the wage paid to a typical (median) worker.
Does raising minimum wage reduce jobs? ›
Theory meets reality. Research from UC Berkeley explores whether these fears are actually witnessed in reality, and suggests that they may be overblown. Indeed, the research suggests that small businesses don't appear to cut jobs in response to an increase in the minimum wage, and may actually benefit from it instead.
How does minimum wage affect people's lives? ›
To date, researchers have estimated modest impacts of minimum-wage increases on health. Evidence suggests minimum-wage increases are associated with declines in smoking prevalence and the number of days with health limitations among low-wage workers and lower prevalence of low birth weight among such workers' newborns.
What is one potential negative externality of minimum wage laws? ›
If some near‐poor, low‐skilled workers lose their jobs or have their hours cut as a result of minimum wage increases, then their incomes may fall, resulting in a rise in poverty among these households.
Do minimum wages have a negative impact on employment in the United States? ›
Increasing amounts of evidence from the US indicate that higher minimum wage levels lead to fewer jobs. Studies that focus on the least-skilled workers find the strongest evidence that minimum wages reduce jobs. Targeted tax credits do a better job of reaching the poor than minimum wages do.
Does higher minimum wage cause inflation? ›
While arguments for wage-push inflation exist, the empirical evidence to back these arguments up is not always strong. Historically, minimum wage increases have had only a very weak association with inflationary pressures on prices in an economy.
