“…no business which depends for existence on paying less than living wages
to its workers has any right to continue in this country.”
1938 Fair Labor Standards Act – minimum wage: 25 cents
The whole subject of minimum wage laws and their effects on local and regional economies is a contentious one. We’re at an important juncture in the debate now because a number of municipalities have recently passed ordinances to raise minimum wages. So we have some natural experiments we can watch over the next few years. While we’re waiting for those efforts to play out, though, we can turn to a large number of highly respected studies of the matter to see whether raising a minimum wage is, as its critics claim, a “job killer.”
The Center on Wisconsin Strategy (COWS) comprehensive study, Raising the Minimum Wage to $10.10 per hour in Wisconsin, found that
increasing the minimum wage does not “kill jobs.” 600 economists, including seven Nobel prize winners and eight past presidents of the American Economic Association, have called for an increase in the minimum wage. Their letter sums up the case on jobs: ‘In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.’
This chart illustrates the disconnect between productivity and wages, and what wages would be had they kept pace with productivity.
The following results of the study show that the increase would be immediately beneficial for over 550,000 Wisconsin residents. Contrary to the fond reminiscences and faulty assertions of Senator Ron Johnson and Governor Scott Walker, 80% of minimum wage workers are adults over twenty years.
- Increasing the minimum wage to $10.10 by July 2016 would increase wages for over half a million Wisconsin workers. Assuming the federal schedule of increases, 587,000 workers —over one-in-five workers in the state – would see wages up by $816 million over the phase-in period.
- 404,000 workers currently earning less than $10.10 per hour would be directly affected by the increase. Another 183,000 workers who earn wages just over $10.10 per hour would see wages increase due to a positive ripple effect from the increase.
- With parents who will see wages go up, some 234,000 Wisconsin children will see family income rise as a result of the minimum wage increase.
- Extra wages in workers’ pockets would provide a modest boost to the economy. We estimate that wage increases would increase economic activity by $517 million over the course of the increases. That growth would generate 3,800 new jobs as businesses expand to meet the consumer demand.
Some demographics on the 587,000 Wisconsin workers who would be affected by raising the wage to $10.10:
- 57 percent are women.
- 87 percent are 20 years old or older.
- 47 percent have at least some college education.
- 42 percent work more than 35 hours per week.
- Nearly two-thirds (64 percent) are in families with income below $60,000.
- The average affected worker currently earns about 44 percent of his/her total family income. (Raising the Minimum Wage to $10.10 per hour in Wisconsin)
You can find out how the minimum wage in your area stacks up against what it would take to lift a family out of poverty by using the MIT Living Wage Calculator. The calculator will ask you to input your state and county. It will show you the living, poverty and minimum wages for that county, the typical expenses, and typical annual salaries for a variety of occupations. (It’s very fun. Thank you MIT.)
Many cities and a few states have already begun implementing minimums of varying amounts. In New York, the Fight for $15 movement advocated for a $15 minimum wage and unionization of the fast-food sector. The state passed a plan that requires employers in New York City to increase the present minimum wage of $8.75 to $15 by 2018. The rest of the state will meet that requirement by 2021. In May, the City Council of Los Angeles voted to raise its minimum wage from $9 to $15 per hour over a five year period. Chicago, San Francisco, and Oakland, California have approved increases with many more following suit. Some companies are initiating wage raises ahead of legislation. Even though the state of Washington already had the highest minimum wage in the nation — $9.47 rather than the $7.25 mandated by federal law, Seattle adopted a law increasing the minimum wage within the city limits. Initially the minimum wage increased to $11 an hour beginning April 1, 2015. The success in Seattle is yet to be fully realised. Wage increases are implemented gradually over a period from three to ten years, depending on the number of employees and benefits the business offers, as illustrated in the following chart.
As we watch developments around the country closely, we encourage all progressives to get involved locally. If you attended the Grassroots North Shore Social Action Resource Fair, you met the people from two very active local groups in the fight for a living wage: Citizen Action of Wisconsin and Wisconsin Jobs Now. Follow these links to get involved or visit and like their Facebook pages.