New Evidence on Minimum Wage Hike

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerIn November 2015, I wrote a column titled, “$15 Minimum Wage is Uncharted Territory,” discussing New York’s minimum wage law and speculating on its effects. Given how early we are in the process, however, we know very little currently. New York is not the first jurisdiction to attempt to address low wages legislatively, however. We’re now receiving reports from the territorial explorers in Seattle. And the news, while unsurprising, is disappointing to those who hope to help low wage workers by passing a higher minimum wage.

Low and stagnant incomes at the bottom of the income distribution and the growing gap between high and low wage workers are serious problems for families with low incomes and for the economy. These trends are also potentially destabilizing for society. Read more »

Collateral Damage Revisited: The Minimum Wage

Posted by & filed under CGR Staff.

Kent GardnerOnce again, the Congressional Budget Office is weighing in on a current policy debate—in a just-released report, they have sided with the consensus view among economists that an increase in the minimum wage will eliminate jobs: “Most [low wage workers] would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly.” If the minimum wage goes to $9/hour, CBO estimates job loss of about 100,000 in the second half of 2016, relative to what might otherwise have occurred. If the minimum wage rises to $10.10, they estimate the loss at about 500,000 jobs.

Every policy change has good and bad effects. If the goal is to maximize the number of jobs, we should eliminate the minimum wage entirely. But that would open up some workers to a level of exploitation most of us would find unacceptable, so we put up with some degree of job loss in exchange for this protection. And we counter the effects of the minimum wage on labor demand by putting more money into improving the employability of low wage workers, thus boosting the supply of workers who are more productive. Read more »