clock menu more-arrow no yes

Filed under:

Op-ed: Let states and cities set minimum wages

As it stands, 42.9 percent of tribal members living on the reservation have an income of less than $8,350 per year.
When surveyed, 83 percent of economists believe that raising the minimum wage to $15 would harm youth employment levels, while 76 percent believe it would decrease the number of jobs available.
Adobe Stock

Moving the federal minimum wage to $15 is an idea that should be abandoned.

A majority of highly reputable, respected economists from the Economic Policies Institute believe that raising the minimum wage to $15 per hour would have negative effects on the economy. Seventy-two percent of these U.S.-based economists oppose a $15 federal minimum wage, with 50 percent of them strongly opposed.

When surveyed, 83 percent of economists believe that raising the minimum wage to $15 would harm youth employment levels, while 76 percent believe it would decrease the number of jobs available. When surveyed on how this increase would affect small businesses, 67 percent of economists believe it would make it harder for them to stay operational.

Raising the minimum wage could prompt companies to begin moving closer to completely replacing workers with automation. This phenomenon already is occurring in California, where Jack in the Box CEO Leonard Comma has said the company will roll out automated kiosks to replace cashiers, which he said, was a direct result of minimum wage increases in the state.

Red Robin CFO Guy Constant said, “Probably the most challenging thing we’re facing in the industry right now is labor costs,” while former Carl’s Jr. CEO Andy Puzder stated a similar concern, saying, “With government driving up the cost of labor, it’s driving down the number of jobs.”

An increased minimum wage would also negatively affect consumers’ purchasing power. A study by the University of Zurich analyzed data from 166 minimum wage increases in the United States. It found that, in general, wage increases result in businesses and stores increasing prices to offset these new costs. The rise in prices would be more than the rise in wages, negating the benefits of these wage increases. Another study by Greg McClure of Purdue University showed that raising the wages of fast-food workers to $15 an hour would lead to an estimated 4.3 percent increase in prices at those restaurants.

In 2014, the CBO released a report about the effects of a minimum-wage increase on employment and income. The CBO estimated that raising the minimum wage from $7.25 to $9 would lead to about 100,000 job loses, with an estimated 500,000 job loses if the minimum wage was raised to $10.10. With numbers these high just for modest increases of about $2 to $2.50, it is easy to presume that more than doubling the current minimum wage could be disastrous.

A $15 minimum wage also ignores the different socio-economic climates of individual states. Different states have different costs of living. For example, when comparing indexes of the costs of living in cities and towns within states (with a score of 100 equaling the national average), Utah has a very strong score of 95.7. Pacific states such as California, Oregon and Washington, and Northeastern states such as New York, Vermont and New Jersey have the highest indexes and costs of living by far.

If a hypothetical national minimum wage of $10.10 were adjusted to reflect local costs of living in specific cities, taking into account variables such as food, housing, health care and transportation costs, cities such as Idaho Falls, Idaho; Pueblo, Colorado; and Youngstown, Ohio, would have a wage of around $8.50-$9.

Cities such as San Francisco, Seattle and Boston would have wages in the ballpark of about $12-$15, with New York City sitting at a whopping $22.

It would be more advantageous and beneficial to the country to allow individual states and cities to dictate their minimum wage standards. This would protect rural communities where the cost of living is significantly lower than major urbanized areas.