The debate over raising the minimum wage can quickly become a fog of studies and numbers. So in the spirit of keeping people honest, we review some of the arguments against raising the wage made in a Philadelphia Inquirer article by Pennsylvania Chamber of Business and Industry chief Gene Barr.
Young Workers
Barr claims that a majority of minimum wage workers are young people, under the age of 25, who are not supporting families. By this, he means those earning exactly the current minimum wage of $7.25 per hour or less. This small group is not representative of the much larger group that a minimum-wage increase would actually impact.
If you look at the ages of the larger group of workers impacted by a minimum-wage increase to $10.10 an hour—say, people who earn $8 or $9 an hour—83.5% of them are age 20 and older. The following figure breaks that age distribution down. And, yes, 38% of the people impacted are over the age of 40!
Workers in Middle-Income Households
Barr also claims that many minimum wage workers are part of middle-income households that do not need special help.
Middle-class wages and incomes are lower today than they were a decade ago, so I’m pretty sure many middle-income households would appreciate the boost that comes with a minimum wage increase for a household member. That said, out of the more than 1 million people who would get a raise from a minimum wage increase, 62%—just over 660,000—have family incomes that would place them below the median family income of $65,109 in Pennsylvania in 2012.
On average, the workers who would get a boost from a minimum wage increase to $10.10 per hour earn more than four-tenths (42%) of their family’s total income.
And with respect to the “special help” remark, remember we are talking about income earned from work. The minimum wage today is 23% lower than it was in 1968. This isn’t about workers needing special help; this is about undoing the damage done to family finances by fierce political opposition to adjusting the purchasing power of the minimum wage to reflect the rising cost of living.
Small Businesses
In the Inquirer article, Barr is quoted as saying: “Half [of minimum-wage earners] work for small businesses [with] less than 100 employees; two-thirds work for businesses that employ less than a thousand people.”
Barr is quoting national data on workers earning between $7.25 and $7.30 an hour, drawn from the U.S. Census Bureau’s Current Population Survey. But as I noted previously, he is using a small, atypical group of workers (even if a slightly different one than before) to support a claim that is not correct for the group of workers who would benefit from a minimum wage increase to $10.10 per hour.
In the Current Population Survey, when you ask for the size of employers with workers earning $10 (not quite $10.10, but close) or less per hour, the answer you get back is two-thirds of those workers are employed by firms with 100 or more employees.
In sum, an honest and accurate accounting of the impact of a minimum-wage increase concludes that the bulk of the workers who would benefit are adults who contribute substantially to their family finances and are often employed by some of this country’s largest, most successful companies. It’s a shame the business lobby still insists on trying to confuse people by selectively quoting statistics aimed at advancing their cause.
Cut Hours
Finally, Barr claims some employers will cut staff or hours if the minimum wage is increased.
This is where we come to the meat of the disagreement—what happens to employment when the minimum wage is raised. A lot of labor economists, including me, read the research literature as suggesting that modest increases in the minimum wage that have occurred over time have had little or no impact on employment.
You, meanwhile, are left having to choose who to believe. A key part of your decision should include an evaluation of the record of the business lobby in talking about this issue. Can you trust that you are getting an honest assessment of the research literature from advocates who continue to claim that most beneficiaries of a minimum wage increase are affluent teenagers?