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Years of strikes and rallies to raise the minimum wage across the US are starting to pay off.
Earlier this month, New Jersey became the fourth state in the country to raise its minimum wage to $15 an hour. Illinois is poised to become the fifth one.
On Thursday, Illinois state lawmakers passed a law that will gradually raise the wage floor from $8.25 to $15 an hour by 2024 —the first state in the Midwest to do so. Illinois’s new governor, J.B. Pritzker, had campaigned on a $15 minimum wage and is expected to sign the bill in the coming days. Earlier this month, New Jersey Gov. Phil Murphy signed a similar bill.
In all, nearly 2 million low-wage workers in both states will get a raise in 2019, according to an analysis by the left-leaning Economic Policy Institute.
The news signals growing momentum for the years-long effort to raise the minimum pay to $15 an hour for workers all across the country. California was the first state to hike hourly wages to $15 in 2016, followed by Massachusetts, New York, and Washington, DC. And Democrats in Congress are now considering a bill for the first time that would establish a $15 federal minimum wage.
Adriana Alvarez, a McDonald’s employee in Chicago and a leader of the Fight for $15 movement, said it took years of protests, rallies, and strikes to make this change happen. “We will have money to buy shoes for our kids and keep the lights on. We’ll be able to put breakfast on the table and maybe go out to the movies every now and then,” she said in a statement Thursday, in reaction to the news.
Fast-food workers have been at the forefront of this effort to increase wages. Within five years, they’ve transformed an improbable proposal into a popular policy — one that would address, in part, the slow wage growth that American workers are experiencing.
Business groups, meanwhile, are not happy about the fight for $15. They’ve long pushed back against any effort to raise the minimum wage, claiming it would destroy small business and trigger massive job losses. The president of Illinois’s Chamber of Commerce said the new law will make Illinois a “second-tier” state, and will encourage businesses to move out of the state.
The chamber had lobbied hard to quash previous attempts to raise the minimum wage. The state’s last governor, Republican Bruce Rauner, angered workers in Illinois when he vetoed a similar bill to raise the minimum wage to $15 in 2017, saying that “that economic evidence suggests such a big wage hike would hurt workers more than help.”
But the idea that raising the minimum wage is actually bad for workers is getting harder to support, as a growing body of research discrediting that claim emerges.
What research says about the impact of raising the minimum wage
There are few topics US economists have researched more than the impact of raising a minimum wage. Their findings have varied over the past 30 years, but there are two things most mainstream economists now agree on.
First, they agree that raising the minimum wage increases the average income of low-wage workers, lifting many out of poverty (depending on how big the raise is). Second, raising the minimum wage likely causes some job losses.
The remaining disagreement revolves around how extreme the job cuts would be.
Some research suggests hundreds of thousands of American workers could lose their jobs with a modest increase to the minimum wage. Douglas Holtz-Eakin, an economist at the conservative American Action Forum, points to a 2014 study from the Congressional Budget Office that estimates that a $10.10 federal wage floor could lead to about 500,000 lost jobs because higher labor costs would lead some employers to scale back their staff.
Other research concludes that increasing the minimum wage has an insignificant impact on employment, or none at all.
The best way to evaluate all the different conclusions is to analyze all the research findings together — what scientists call a “meta-analysis.” And the most recent ones suggest that the most likely impact on employment is minimal.
For example, a 2016 study by economists at Michigan State University crunched data from 60 research studies on the minimum wage in the United States since 2001. They concluded that a 10 percent increase in the minimum wage would likely reduce overall employment from 0.5 percent to 1.2 percent.
Another meta-analysis comes in a new research paper by economists at the University of Massachusetts, University College London, and the Economic Policy Institute. They studied data from 138 cities and states that raised the minimum pay between 1979 and 2016. The conclusion is that low-wage workers received a 7 percent pay bump after a minimum wage law went into effect, but there was little or no change in employment.
In a 2018 working paper, soon to be published in the American Economic Journal: Applied Economics, economist Arindrajit Dube shows that raising the minimum wage significantly reduces the number of families living in poverty. For example, he concludes that a $12 minimum wage in 2017 would have lifted 6.2 million people out of poverty.
But businesses, for the most part, really dislike the idea of raising the minimum wage. The US Chamber of Commerce, the US Business Council, and the Restaurant Association are just a few of the big industry groups that have lobbied aggressively against past attempts to do so.
Of course it would cost businesses more to pay workers more, and would likely lead to some job losses. But business groups have hyped up the economic impact of raising wages to the extreme, suggesting the economy would collapse and mass layoffs would ensue. What the research shows, however, is that this just isn’t true.
The fight for $15 has reached Congress
Around the same time that New Jersey signed its wage hike into law on February 4, Democrats in Congress began their push for a $15 minimum wage in every state.
A few days later, the House Committee on Education and Labor held its first hearing on the Raise the Wage Act, which would eventually double the federal minimum wage by 2024. The current minimum wage has been stuck at $7.25 since 2009. The law would also tie future changes to the minimum wage based on changes to median workers’ pay. So if middle-class wages go up — or down — so does the minimum wage.
The bill, which has more than 190 co-sponsors (all Democrats), would also phase out the lower minimum wage for tipped workers — such as restaurant servers and valets — which has been stuck at $2.13 an hour since 1996.
Republicans in the House want nothing to do with the bill, and are sticking with the claim that it will actually hurt workers and trigger layoffs.
But their stance does not reflect what voters want — since most Americans want Congress to raise the federal minimum wage. Poll after poll shows widespread support for raising the federal minimum wage, even among Republican voters. And a majority of voters want it increased to $15 an hour.
That may explain why Thomas Donohue, president of the US Chamber of Commerce, recently toned down his usual criticism of efforts to raise the minimum wage, saying the chamber is “going to listen.”
While Congress debates the merits of a $15 wage floor, state lawmakers are pushing forward with their own plans. In fact, efforts are ramping up in Pennsylvania, Maryland, Connecticut, and Hawaii too.
