The effect of increases in the minimum wages

2019 saw the implementation in 20 states and 24 counties and cities of new laws raising the minimum wage.

THANKS TO LEGISLATIVE efforts, ballot measures and adjustments for inflation, workers in 20 states will see an increase in their minimum wage in 2019.

These minimum wage increases, which range from a $0.05 inflation adjustment to a $2 per hour increase, will impact 5.2 million workers and, for those who work year-round, it will raise their annual pay between $90 and $1,300, according to a recent Economic Policy Institute report. On Jan. 1, 2019, 24 cities and counties will also raise their minimum wages.

Though the federal minimum wage has remained at $7.25 an hour since 2009, there has been a growing movement across the nation to raise this number at both the state and local levels.

In 29 states, the minimum wage now surpasses the federal level, and a handful of state have pledged to raise their minimum wage to $15 an hour over the next few years.

Conservatives tend to oppose raising the minimum wages ostensibly because it will result in job loss and thus hurt the very people it is supposed to help, though I suspect that the real reason is because it cuts into corporate profits and thus reduces their stock dividends and values or that they are ideologically opposed to any measure that restricts the freedom of businesses to treat their workers as they wish.

Following the decision by the city of Seattle in 2017 to raise the minimum wage to $15 an hour, conservatives rushed to publicize a study done at the University of Washington that seemed to show just such a job loss. But the claim that it cost jobs was based on a single flawed initial study that had not been peer reviewed and was contradicted by other data and more rigorously done studies.

Much of the hand-wringing was based upon a deeply flawed University of Washington study. As we noted in 2017, the study’s fatal flaw was that its analysis excluded large multistate businesses with more than one location. When thinking about the impact of raising minimum wages, one can’t simply omit most of the biggest minimum-wage employers in the region, such as McDonald’s and other fast-food chains, or Wal-Mart and other major retailers. These are the very employers that were the main target of the minimum-wage law; indeed, the law established an even higher minimum wage of $15.45 an hour for companies with 500 or more employees.

But we can’t emphasize enough just how wrong many of the initial analyses of the wage increase have been. Cognitive dissonance is a powerful force. If your ideology includes the belief that all government attempts at raising living standards are doomed, then of course you are going to be against mandated minimum wages. The problem occurs when these folks are confronted by facts that are at odds with their belief systems. The options are to either rethink your ideology or alternatively ignore the data. Most participants seem to have done the latter. Kudos to the University of Washington team for at least trying to incorporate the facts into their latest research.

The authors of that original flawed study have released a revised study that recanted many of their initial conclusions.

But as is often the case, people who oppose the rise in minimum wages seized upon and publicized the original flawed study and ignored the recantations.


  1. says

    Conservatives tend to oppose raising the minimum wages ostensibly because it will result in job loss and thus hurt the very people it is supposed to help

    What they are saying is “we will punish you” -- that’s the usual capitalist response to labor demanding a bigger slice of the action.

  2. says

    My go-to reaction to these people is to point towards Germany. It introduced minimum wage in 2015 (higher than in US, I might ad) and conservatives were screaming bloody murder, issuing dire predictions about impeding economical collapse and dooooooom!!!!!!!!!!!!!

    After three years and counting, not a single one of those dire predictions has materialized. Most recent english written article that I found through quick google search -click-.

    To me the issue is settled. Higher minimum wages help the economy, because they increase money circulation.

  3. Carmad John says

    @2 There’s a corollary to that:

    Lower taxes -- particularly on the rich -- decreases money circulation, thereby making life difficult for EVERYONE -- including those very same rich. After all, they have to drive down the same roads as we do, breath the same air, and eat the same food. If they don’t pay their fair share in maintaining the roads, air and food quality, they suffer too. The rich have been blind to this since Reagan days, and Republicans -- for some strange reason -- want to keep them that way.

  4. says

    “Profit” is a measure of how much you can depress the value of the labor that makes a business work. Any businessperson who says their business is operating on such thin margins that they can’t afford to pay labor more has a “hobby” not a “business” -- ultimately all they are saying is that they’d rather pay the renter class more and labor less, for the fruits of labor’s work.

  5. lanir says

    I ran into this in a practical way when troubleshooting hosting problems for customers in India. Power outages would frequently cause network outages.

    Wealth inequality seems to be even greater over there to the extent that infrastructure like electricity isn’t reliable. I don’t have any great insight into India but these details are bad enough to show up half a world away.

    It seems like you can hoard all the money but the more you do, the more awful the environment around you gets. Eventually it hits a point where even rich, selfish, self-absorbed people notice it impacting them and they have to decide what to do. Unfortunately our current crop of assholes seems to favor myths and self-serving fantasies about those less well to do than themselves over recognizing the root cause and fixing it. The US has had a large enough middle class to support their reckless greed and avarice in the past and they’d like to pretend they’re tapping a limitless resource.

Leave a Reply

Your email address will not be published. Required fields are marked *