Where the fight for a $15 minimum wage goes from here

Value judgments.
Value judgments.
Image: Reuters/Jason Redmond
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Since fast-food workers in New York walked off the job in 2012 to demand higher wages, the movement to raise the minimum wage to $15 an hour has found success in cities and states around the US.

Joining residents of Democratic-leaning states like Massachusetts, New York, and New Jersey, voters in Florida approved a $15 wage floor in November, showing that even in more conservative political environments, minimum wage acts are popular.

With Florida’s recent approval, more than 40% of the US workforce is located in cities or states with minimum wages set to climb to $15 or more.

Covid-19 has been especially devastating for retail, restaurants, and other sectors with high concentrations of employees earning minimum wage. But the pandemic arguably has been helpful in creating increased recognition for frontline staff who are cleaning hospital rooms, working in restaurants, or keeping supply chains moving, fueling the public pressure to raise wages of some of America’s hardest workers and lowest earners.

“It has crystalized in a lot of people’s minds that for a number of fast-food and other essential workers in this moment, they often have to choose between their lives and livelihood, and they shouldn’t have to do that in this pandemic,” says Allynn Umel, a national organizing director for the Fight for $15 campaign.

Even the business community has been shifting tone—though that’s a trend that pre-dates the pandemic. In 2018, Amazon set a $15 wage floor for all of its US employees. In 2019, McDonald’s came out to say it will stop lobbying against minimum wage increases—while the US Chamber of Commerce said it was willing to work with Congress on legislation addressing wage increases.

But Covid-19 has undoubtedly tilted the landscape further. Target has raised its starting wage to $15 an hour, months ahead of the deadline it set for itself when it announced a graduated pay increase plan in 2017. Home Depot said in November that it will invest $1 billion annually to increase wages for its hourly frontline workers. Even the National Restaurant Association, which as recently as 2019 had come out strongly against raising minimum wages, now appears to be softening its opposition.

“We’re ready to have a conversation about how to create an environment where people can make the industry their forever jobs,” Sean Kennedy, the National Restaurant Association’s executive vice president for public affairs, told Quartz. “At the same time, the foodservice industry is in a precarious position, and we urge policymakers to be cautious and thoughtful in considering the contours of an increase to the minimum wage. Dramatic hikes in labor costs will push many restaurants into immediate bankruptcy.”

What about the federal minimum wage?

While the federal minimum wage has remained at $7.25 for the past decade, more than half of US states have approved minimum wage increases since 2014.

A 2019 analysis by the nonpartisan Congressional Budget Office found that increasing the minimum wage nationally to $15 by 2025 would boost the wages of 17 million Americans but would lead to 1.3 million to lose their jobs. (Some economists have argued that the earned income tax credit, which refunds taxes owed by low-income families, would avoid job losses while targeting those who need help the most.)

Proponents of raising the minimum wage, meanwhile, see it as an opportunity to put money back into people’s hands to boost the broader economy, while reducing poverty and narrowing income inequality. For example, one recent study found that higher minimum wages have been a major factor in helping to close the black-white earnings gap.

US president-elect Joe Biden has signaled support for raising the federal wage to $15 an hour. But if the Republicans continue to control the Senate, an increased federal minimum wage will be harder to passand more minimum wage increases are likely to be proposed and passed at the state level, says Paul Sonn, state policy program director for the National Employment Law Project, which advocates for raising minimum wages.

According to Sonn, Delaware and Rhode Island are likely to mandate increases in 2021, and wage campaigns in Ohio and Idaho, which were in the works but set aside due to the pandemic, are likely to reappear in the near future, possibly landing on the ballot in 2022.

Minimum wages and the cost of living

Economists in the past have expressed concern that increases to the minimum wage could hurt employment in low-wage areas, since the wage hikes would be relatively steep in those places. But a 2019 working paper from Berkeley’s Institute for Research Labor and Employment suggests that a $15 minimum wage would not cause job losses in low-wage areas—and indeed there’s a growing number of states with minimum wages now at $15, or close to it, covering workers who live far outside of the country’s most expensive cities.

That includes Washington state outside of Seattle, Oregon outside of Portland, New York state outside of the New York City metro area, California outside of the coastal cities, Illinois outside of the Chicago area, and all of Florida. None of these places has a particularly high cost of living, as Michael Reich, an economist at the University of California, Berkeley, points out.

Meanwhile, even relatively low-wage states including Missouri and Arkansas also have implemented state minimums above the federal level.

There “really isn’t a good example of a too-high minimum wage,” says Ben Zipperer, an economist at the left-leaning Economic Policy Institute.

Most research has found that modest increases to the minimum wage have minimal impact on employment. A 2017 study, which looked at the minimum wage increases in Seattle—the first major US city to raise its minimum wage to $15—found that an initial increase to $11 seemed not to have much of an impact on employment. But the second rise a year later, to $13, led to a sharp decline in both jobs and hours worked.

Penn State assistant professor of public policy Hilary Wething, who was part of the team of researchers who found evidence of the employment losses in Seattle, notes that the proposed national legislation is much “less aggressive” than the schedule in Seattle’s policy, which would give businesses more time to acclimate to a federal mandate.

Editor’s note: An earlier version of this article suggested that a minimum wage increase could land on the ballot in Delaware and Rhode Island in 2022. In those states, any increase would come through legislation—which the NELP expects to see in 2021.