The debate about minimum wage continues, with businesses warning that they can’t afford to pay a higher minimum wage and will lay off workers or close if the rate is raised. The Congressional Budget office is also predicting job losses if minimum wage increases – in fact, they estimate up to 1 Million jobs are at risk. Economic studies, however, show that this is not the case, and economists say that raising the minimum wage would help almost all low-wage workers without job loss or an effect on the federal budget.
Where are Minimum Wages Going Up?
Although President Obama wants to raise the federal minimum wage to $10.10, other minimum wage increases across the country are scheduled over the next four years. The highest is in SeaTac, Washington in 2014, where the minimum wage will go from $9.32 to $15 for airport workers. California is increasing to $9 on July 1 of 2014. States that are planning an increase in 2015 include New York and Connecticut to $9 and Delaware to $8.25. California and Washington, D.C. plan to raise their rates in 2016, to $10 and $11.50 respectively. In Maryland, Montgomery County and Prince George’s County both plan to raise their minimum wages to $11.50 in 2017.
What Restaurants Are Saying
Restaurants are bracing for the minimum wage increases that are scheduled over the next four years. Jack In The Box, Cheesecake Factory, Denny’s and BJ’s Restaurants all plan to raise menu prices to cover the increased operating costs due to higher minimum wage. Others are more strongly opposed. White Castle VP James Richardson claims a $15 minimum wage would mean his restaurant chain would have to layoff workers and close stores.
Businesses aren’t the only ones opposed to raising the minimum wage. In Seattle, where the minimum wage is already at $9.32, working class employees don’t think it’s fair that minimum wage workers might get rates similar to theirs. Others believe minimum wage jobs should not be considered living wage jobs and therefore, shouldn’t be paid as such. They claim minimum wage jobs are for entry-level, low or no-skills work. Particularly at issue are those jobs that traditionally earn tips on top of wages, as some individuals believe customers won’t tip as much, or at all, if they know their servers are already earning a high minimum wage.
Economists Weigh In
Incomes of the top one percent of American earners rose by 275% between 1997 and 2007 but the bottom 20% rose by only 18%. With numbers like these, economists and supporters of raising minimum wage have good ammunition. The Centre for Economic and Policy Research (CEPR) estimates that federal minimum wage would actually be closer to $21.72 if it had kept up with productivity gains since 1968. The CEPR’s John Schmitt points to the unionization of janitorial jobs in the late ‘90s to explain the current demand for a $15 minimum wage, saying the growing debate is really about collective-bargaining rights.
Seventy-five economists, seven of them Nobel laureates, publicly called for politicians to raise the federal minimum wage to $10.10 by 2016, in part due to the observational studies of the late ‘90s. Opponents disagree with the reasoning, however, as previous studies observed only modest minimum wage increases and little to no job loss. The currently proposed increases are as much as 39%, which is not modest at all.
Whatever the result, employers will have to deal with adjusting to new requirements when enacted, and whether or not workers will suffer from higher unemployment or enjoy higher wages is still up for much debate.
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