According to recent studies by labor economists, raising the federal minimum wage from its current rate of $7.25 per hour to $15 per hour would have significant economic and social benefits for tens of millions of American workers and their families without substantial negative effects on employment. This paper aims to present compelling arguments and evidence from scholarly research to make the case that raising the federal minimum wage to $15 an hour is a necessary and prudent policy change that would meaningfully improve the lives of many while not unduly harming business or economic growth.
The federal minimum wage, first established in 1938 under the Fair Labor Standards Act, was intended to be a living wage that could support a basic but decent standard of living. Over time its purchasing power has badly eroded due to a lack of regular increases to keep pace with inflation and rising overall prosperity. If the minimum wage had kept up with inflation and productivity gains since 1968, it would be over $20 per hour today according to calculations. Currently, the real value of the federal minimum wage is nearly 30% lower than it was 50 years ago. This means that millions of low-wage workers find it increasingly difficult to afford basic necessities like housing, food, transportation, and healthcare on their minimum wage earnings.According to researchers, a full-time worker earning $7.25 an hour makes only around $15,000 a year, which is below the federal poverty line for a family of two. Yet there are at least 17 million workers in the United States who would directly benefit from an increase in the minimum wage to $15 an hour through higher earnings. Another 10 million workers earning slightly above $15 could also see increased wages as employers raise pay scales above the new minimum to retain employees. In total, this constitutes over one in four American workers and over 100 million family members who would receive some boost in living standards should Congress implement such a reform.
Lifting millions of American workers and families out of poverty and closer to a modest living standard would have overwhelmingly positive impacts on both human welfare and the overall domestic economy. Researchers have found that low-income families tend to spend additional wages on immediate needs like food, housing costs, medical bills and student loans, as well as discretionary purchases that stimulate local businesses. This injection of spending power into the economy from lower-income groups has either a neutral or stimulative impact on business activity and employment based on numerous economic studies. It is also argued this would meaningfully alleviate growing problems like income inequality, food insecurity, housing instability and reliance on public assistance programs that tax state and federal budgets. One comprehensive study assessed that raising the minimum wage to $12 by 2020 and indexing it to median wages thereafter could generate over $100 billion per year in additional economic activity. At the same time, studies that predicted widespread job loss effects have been widely discredited, with the academic consensus being that moderate increases do not generally threaten employment levels according to reputable papers published in top economic journals.
Despite claims to the contrary by some opponents, raising the minimum wage has strong public support across partisan lines based on opinion polling. Several states and localities have proactively raised pay standards above the federal floor in recent years with positive results and few detrimental side effects reported. Most Americans intuitively understand that if someone works full-time, they should not have to live in poverty and struggle just to afford basic needs. Arguments against raising the minimum often rely on outdated economic models and ignore current empirical research. Moreover, some minimum wage workers are enrolled in public programs that effectively subsidize low-road employers who underpay relative to a living wage. Public assistance should not be necessary to supplement the earnings of full-time jobs. In today’s economy with record corporate profits, shareholders, and rising overall prosperity, policymakers have an opportunity as well as an obligation to enact long overdue reforms improving the livelihoods of millions through a minimum wage increase that is supported by evidence and public sentiment.
While opponents argue that raising the minimum wage may reduce employment opportunities or increase consumer prices to a small degree, reputable academic analyses suggest these effects would likely be modest or nonexistent based on examples from increases in other states and nations in recent history. The benefits of paying working Americans a wage they can survive on far outweigh hypothetical downsides. Reasonable increases in line with the current proposals would help repair a basic standard of living without threat to business viability. Many economically developed peer nations have set minimum wages well above the U.S. level without economic catastrophe. With millions of low-wage workers one unexpected expense or reduced work hours away from poverty, addressing this problem should be a priority. A $15 federal minimum wage by 2025 along with annual adjustments for inflation is a policy solution that is grounded in facts, compassionate to struggling citizens, promotes greater opportunity and shared prosperity. For these reasons, Congress must act expeditiously to raise the federal minimum wage to a living standard of $15 per hour.
This paper will further explore these arguments by examining the following areas of research: analysis of the economic and social impacts of previous minimum wage increases; review of common criticisms and counterarguments based on current empirical evidence; evaluation of the experience of other developed nations with higher wage standards; assessment of public opinion polls and surveys on attitudes about minimum wage policy; exploration of potential mechanisms for phasing in and implementing an increase; and recommendations for an optimal phase-in schedule and adjustment formula given existing scholarly literature. The goal is to provide compelling factual information supporting the proposal for a $15 federal minimum wage that policymakers, economists, journalists, and the general public may find useful as this debate continues. Overall, it will be argued that increasing pay standards for millions of low-income Americans is the right, evidence-based solution that deserves prompt action from our elected representatives.
Andrew Stroud