Bill Knight column for Thursday, Friday or Saturday, June 8, 9 or 10
The measure offers time for employers to plan for higher costs and offers some tax relief to small businesses. It also offers low-wage workers a chance to more fully participate in the economy. After all, minimum-wage workers who get raises don’t take their new income out of the economy to put into some shelters or savings; they plow it back into the economy to pay for food, rent, clothes, etc.
The national minimum wage is $7.25; in Illinois it’s $8.25, but if the U.S. minimum wage had kept up with productivity since 1960, according to U.S. Sen. Elizabeth Warren (D-Mass.), it would be more than $22 an hour.
Conventional wisdom says higher pay for low-wage workers will mean higher prices for consumers, and that’s not illogical, but it doesn’t consider increased traffic. Political opponents say minimum-wage increases could be bad if they occur too swiftly or go too far, or if the economy is already weak. Business lobbies say minimum-wage increases always hurt the economy by reducing growth, so such hikes are “job-killers” because employers will cut their labor forces to keep payrolls about the same.
However, a new, comprehensive study – the first analysis of job trends 12 months after minimum-wage hikes starting in 1938 – says, “Nope.”
There’s no connection between minimum-wage increases and job losses, according to the National Employment Law Project’s report, “Raise Wages, Kill Jobs? Seven Decades of Historical Data Find No Correlation Between Minimum Wage Increases and Employment Levels.”
In fact, employment went UP 68 percent of the time.
“As those results mirror the findings of decades of more sophisticated academic research,” write study authors Paul Sonn and Yannet Lathrop, “they provide simple confirmation that opponents' perennial predictions of job losses are rooted in ideology, not evidence.”
Over the decades, there were eight times when total or industry-specific employment declined after a minimum-wage increase. But five of those times were during recessions, two times the economy was emerging from recession, and once the economy was about to go into a recession.
True, nearby states’ legislatures are in a “race to the bottom.” They mistakenly seek advantage over other states, counties and cities that have enacted minimum-wage hikes. Nineteen states began 2017 with higher minimum wages. Seven (Alaska, Florida, Missouri, Montana, New Jersey, Ohio and South Dakota) automatically raised theirs based on the cost of living, five (Arizona, Arkansas, Colorado, Maine and Washington) increased their rates through ballot initiatives voters OK’d, and seven states (California, Connecticut, Hawaii, Massachusetts, Michigan, New York and Vermont) did so as a result of legislation. Also, besides Washington, D.C., Maryland and Oregon set to raise their minimum wages July 1, more than 40 municipalities and counties have enacted raises.
But Iowa reversed any increases approved locally and banned counties and cities from improving wages and benefits. Likewise, Missouri passed bills prohibiting minimum-wage hikes, past and future. About 20 other states are considering similar rollbacks.
Meanwhile, 73 million Americans (a fourth of the nation!) are in households eligible for the Earned Income Tax Credit for the working poor. Also, almost three-fourths of American adults support raising the minimum wage to at least $10.10 an hour, according to a recent survey by Pew Research.
Again, if workers have more money, they spend it as consumers, and the new commerce lets businesses hire more workers.
Gov. Rauner should sign the bill.
[PICTURED: Graphic from the Economic Policy Institute.]