Everyone loves a fun party game/icebreaker. Test your knowledge of the federal minimum wage. Can you tell which of the following statements is NOT true about raising the federal minimum wage to $25 an hour?
A. It would not cost any jobs.
B. Only a tiny fraction of all working women earn minimum wage, so this would not have a huge positive impact on all women.
C. Federal wage hikes would worsen inflation, and real family income would fall overall.
Let’s take each statement one at a time.
A. LIE! The latest liberal proposal for a $25-per-hour minimum wage would be even more devastating than the $15 minimum wage push. The nonpartisan Congressional Budget Office (CBO) estimated that a $15-per-hour federal minimum wage would kill 1.3 million to 3.7 million jobs, even as it raised wages for millions of workers. Another estimate pegs losses even higher at 7 million full-time jobs. Most literature on the subject of minimum wage increases agrees that they reduce employment. With the worry of artificial intelligence taking jobs, tripling the federal minimum wage from its current level of $7.25 per hour would accelerate the process of companies replacing their lowest-skilled workers with new technology. Employers could also forgo hiring any new workers, reduce staff hours, cut benefits, and raise prices on the goods and services they provide to consumers. A high minimum wage does a disservice to young or inexperienced workers seeking to build skills.
B. TRUE! According to the Bureau of Labor Statistics, less than 3% of women earn at or below the federal minimum wage. While we do want to help men and women struggling to make ends meet, we also realize that most minimum-wage workers are not making a career out of these entry-level jobs but using them as springboards to better-paying positions. Two out of three minimum wage workers earn a raise within their first 12 months on the job. When we raise the minimum wage, we risk killing valuable starter jobs for women who are looking to gain skills and move up the ladder.
C. TRUE! A tight labor market has given workers more leverage to demand higher pay, so raising the federal minimum wage is unnecessary. Even so, the Employment Policies Institute found that a $1 minimum-wage hike could trigger up to a 5.5% increase in prices for food, rent, child care, and other necessities. The CBO found that for a $15 minimum wage, total real family income could fall by $9 billion in 2025. Real income earnings for lowest-wage earners would rise, but they would be more than offset by income losses for unemployed workers, business owners, and consumers. Those are trade-offs that majorities of Americans may not be willing to make as public support for a $15 minimum wage plummets when they learn of the economic impacts.
Bottom Line:
Raising the federal minimum wage is not the answer. As our lawmakers strive to rein in the rampant government spending on anti-poverty programs, we need practical ways to make work more accessible. A high minimum wage pushes people out of work and more into poverty.