The $15 minimum wage is a ridiculous proposal, designed to win votes with false promises.
Both economic theory and the evidence compel that conclusion. Or, instead, you can take the word of those who, in public, pay lip service to the $15 wage. Because in private, they admit it’s a bad idea.
Among the illegally obtained and leaked emails of senior Clinton campaign staffer John Podesta are several gems, one of which is a warning from Neera Tanden, head of the left-wing Center for American Progress that Podesta helped found. In an email chain discussing New York City Mayor Bill DeBlasio’s decision to come out in favor of more than doubling the minimum wage, Tanden noted that her group had not formally come out for it, and warned that Clinton shouldn’t either.
“Substantively, we have not supported $15 — you will get a fair number of liberal economists who will say it will lose jobs,” she wrote. Still, eleven months later, she was among those praising California Gov. Jerry Brown for signing legislation that will make $15 the minimum wage in California. And Clinton, though supportive of some local efforts, has avoided backing a national $15 wage, in spite of pressure from her left to do so.
A massive, 100 percent increase in the minimum wage will not translate to a massive pay hike for those making it, as proponents fancifully hope. What it will do is make the cheapest jobs substantially more expensive to staff. Companies will adjust to government meddling by finding new ways to do the same work with fewer people.
Entry-level and unskilled workers have only one advantage over others in the job market, and that is that they are willing to work for less than their experienced and skilled competitors. Take that away from them, and they will have fewer opportunities to get a job. This is especially true for those who lack work experience, are perhaps less competent, or have a negative mark on their record. If government squeezes from the bottom the price difference between these and a more experienced worker in a $20 job, then employers’ incentives to hire such workers are diminished.
Another way employers could bypass a doubling of low-skill labor costs is automation, which the $15 wage would artificially make much more cost-competitive. Machines never call in sick or file employment complaints, they don’t need health benefits, and they don’t require an employer payroll tax contribution, which for a $15 hourly worker represents an additional $1.15 per hour.
This is one reason the nonpartisan Congressional Budget Office, in 2014, estimated that a rise in the federal minimum wage from $7.25 to a mere $10.10 would destroy up to 1 million low-wage jobs overnight. Incidentally, the CBO found that only 20 percent of those workers in the range of $7.25 to $10 per hour are actually living beneath the official poverty line, and 29 percent are in households that make more than three times the poverty rate. This is a reflection of the fact that most minimum wage earners are not sole breadwinners, and many are teenagers still living with their parents.
Meanwhile, although Seattle’s experiment with a phased-in $15 wage is a work in progress, studies have been unable so far to find evidence that it is benefiting low-wage workers there. A study by the University of Washington found that any wage gains so far (the rate is currently $11) have been offset by changes in hours and employment in the fields affected.
There are already many threats to the opportunities available to low-income workers and first-time job-seekers. This election campaign, illegal immigration has been cited as depressing wages. Another threat is that governments could artificially make legal low-wage workers too expensive for employers to justify hiring them.
It is heartening to see progressive activists recognize and acknowledge that threat in their private discussions, even if they hop on the $15 bandwagon in public. As Hillary Clinton noted in one of her $200,000-per-hour speeches, sometimes you need to take a different position in public than in private.
