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Posts tagged ‘Federal Minimum Wage’

It’s Been Six Years Since Feds Raised The Minimum Wage. What Were The Economic Results?


waving flagAuthored by Connor D. Wolf Contributor, 07/25/2015

Six years ago Friday marked the last time since the federal minimum wage was increased, and now with talks of raising it again, here is a look back at its impact.

The federal minimum wage was increased to $7.25 per hour on July 24, 2009 as part of a three step plan. The Fair Minimum Wage Act of 2007 first increased the federal minimum wage to $5.85. After that it automatically increased to $6.55 in 2008 before finally landing on $7.25 per hour in 2009. The hope was it would help to reduce poverty.

“This well-deserved increase will help workers better provide for their families in the face of today’s economic challenges,” then-Secretary of Labor Hilda L. Solis said in a statement. “I am especially pleased that the change will benefit working women, who make up two-thirds of minimum wage earners.”

A renewed push to raise the minimum wage has taken hold in recent years, with unions asking for $15 an hour and President Barack Obama looking at a more moderate $10.10 an hour. Democratic presidential hopeful and self-described socialist Bernie Sanders introduced a bill Wednesday to raise the federal minimum wage to $15 an hour.

“And that’s why the President has made it a policy priority to try to find ways to make sure that American workers are getting paid fairly,” White House Press Secretary Josh Earnest said recently. “So one way we can do that is to raise the minimum wage.”Picture2

The aftermath of the last increase in 2009, however, was not all that good. Though some people found themselves in a better financial situations, others replacementwere left much worse. “Most of them would receive higher pay that would increase,” stated a 2014 report from the Congressional Budget Office (CBO). “But some jobs for low-wage workers would probably be eliminated.”

The CBO report looked at the 2009 increase along with other local incentives. While states cannot go below the federal minimum wage, many have decided to go above it. A report from American Enterprise Institute (AEI) found the impact is much worse for young and low skilled workers. “When the minimum wage rose by 41% between 2007 and 2009 – it had a disastrous effect on teenagers,” the AEI report detailed. “The jobless rate for 16-19 year olds increased by ten percentage points, from about 16% in 2007 to more than 26% in 2009.  Of course, the overall US jobless rate was increasing at the same time, from about 5% to 10%.”

The National Bureau of Economic Research (NBER) and The Heritage Foundation also both found employment opportunities for young and low skilled workers falls when the minimum wage goes up. Not all economists, however, are in agreement about the negative impact of raising the minimum wage. A 2013 study from Center for Economic and Policy Research (CEPR) found the impact on employment would be small at best. “Two recent meta – studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low – wage workers,” the CEPR report found. “The most likely reason for this outcome is that the cost shock of the minimum wage is small relative to most firms’ overall costs and only modest relative to the wages paid to low – wage workers.”Min-Wage-590-LA

Some, like Democratic Sen. Ben Cardin, have even claimed increasing the minimum wage makes employment go up. Those claims though have been mostly disproved. The nonpartisan PolitiFact has called the statement mostly false. Nevertheless, raising the minimum wage may not even be necessary to address poverty. The Illinois Policy Institute (IPI) found most workers are able to move beyond the minimum wage after only a year of employment.

“Of those workers making the minimum wage today, two-thirds will be earning a higher wage one year from now,” an IPI report by Naomi Lopez Bauman stated. “Most workers, once they learn the job and demonstrate a level of competence, will earn more as the value of their labor increases to their current employer or a competing one.”

Americans for the most part overwhelmingly support raising the minimum wage. According to Gallup, upwards of 76% of people favor raising it to $9 an hour while 22% opposed the idea.

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Seven Minimum Wage Facts That Have Democrats Worried


http://www.breitbart.com/Big-Government/2014/01/05/7-Minimum-Wage-Facts-That-Have-Democrats-

by Wynton Hall 5 Jan 2014

 

With the midterm elections just over 300 days away, nervous Democrats reeling from the Obamacare debacle are hoping a big push to raise the minimum wage will be the silver bullet that will spare them from the historic losses they suffered in 2010.

Democrats and unions are busy working to get minimum wage initiatives on state ballots in the hopes of creating an electoral “minimum wage magnet” to attract low-income, minority, and union voters to the polls.

Seven minimum wage facts, however, may diminish Democrats’ high hopes.

1. Just 2.8% of American workers earn at or below the minimum wage.

The U.S. Department of Labor says 1.6 million people make the federal minimum wage of $7.25 an hour. Another 2 million earn below that rate, such as restaurant servers who make tips in addition to a lower base hourly wage which, according to U.S. News and World Report, “in many cases actually puts them   significantly above the minimum wage in reality, if not officially.” That means in a nation of 317 million people, just 3.6 million (1.1%) make at or below the minimum wage. As a share of the U.S. workforce, just 2.8% of people working make minimum wage.

2. Half of all minimum wage workers are 16 to 24 years old.

According to the Department of Labor, “minimum wage workers tend to be young,” and “about half of those paid the Federal minimum wage or less” are below age 25. Many of these are students working while in school or teenagers with part-time or summer jobs. That means half of the people most affected by a minimum wage hike are among those least likely to show up at the polls to vote, especially in a midterm election year. Indeed, minimum wage workers who are 16 and 17 years old are not even legally eligible to vote.

3.  Labor workers already make well above the minimum wage.

Democrats and unions hoping labor workers will be energized by a minimum wage bump will be sad to know that laborers in every single sector of what the government calls “production and nonsupervisory employees”—like manufacturing, construction, mining, retail, transportation, etc.—already earn well above the minimum wage. In fact, in November 2013, the government reported that the average hourly labor wage across all industries was $20.31—a figure nearly three times the federal minimum wage. And as the unions themselves boast, a union member’s annual salary is already $10,400 higher than a non-union worker.

4. Even those who support minimum wage hikes concede it could kill jobs.

Many economists and conservatives point to the body of economic literature that shows minimum wage increases kill jobs and simply encourage companies to pass along the added cost in the form of higher prices. But even ardent supporters like socialist Seattle City Council member Kshama Sawant, who recently helped pass a $15 minimum wage in the SeaTac, Washington, concede the move could spawn job losses. “There may be a few jobs lost here and there, but the fact is, if we don’t fight for this, then the race to the bottom will continue,” said Sawant.

5. Minorities and the poor are hit hardest by the minimum wage. 

Nobel Prize-winning economist Milton Friedman famously noted that “the most anti-black law on the books of this land is the minimum wage law.” Higher wages mean employers seek higher, more skilled workers. That, said Friedman, puts those with disproportionately less education and experience at a significant disadvantage when looking to put their foot on the first rung of the employment ladder.

6. Even progressives concede the minimum wage is no panacea for America’s economic woes.

President Barack Obama’s former chairwoman of the Council of Economic Economic Advisers Christina Romer says, “economic analysis raises questions about whether a higher minimum wage will achieve better outcomes for the economy and reduce poverty.” As a result, says Romer, “most economists prefer other ways to help low-income families.” Similarly, progressive Daily Beast writer Jamelle Bouie says while he supporters the move, “the minimum wage is a Band-Aid for wage stagnation and income inequality” and “doesn’t make up for our sluggish economy and weak labor market.”

7. 21 states already have minimum wages that are higher than the federal $7.25/hr rate.

Just last week, 13 states boosted their minimum wage rates above the federal minimum wage rate of $7.25/hr. That means 21 states now already have minimum wages that exceed the federal rate.

For these reasons and more, Republicans see Democrats’ minimum wage tactic as a desperate attempt to run from the Obama record.

“If I had a dollar for every time Democrats thought their issue of the week was going to be their pathway to victory, I would have enough money to pay taxpayers back all the money that was wasted on the broken Obamacare website,” said Republican Congressional Campaign Committee spokeswoman Andrea Bozek.

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