Voters in Six States (and Two Cities) Say “Yes” to Higher Minimum Wages: But How High Is Too High?

As the U.S. labor world digests the news of the passage of measures in six states (and two cities in California) that have elevated the minimum wage, workers and their families probably are wondering just how high the minimum wage might climb in various states and across the U.S.

On the one hand, when wages are too low, that’s obviously problematic. As we discussed in our recent analysis comparing the lives of fast-food workers in Denmark with fast-food workers here in the United States, when you can’t make enough to pay rent, cover your medical bills, and feed your family — and you’re constantly at risk of losing your job or being made redundant — you suffer, your family suffers, and the community around you suffers.

But critics of minimum wage increases counter that raising the minimum wage too high can disincentivize employers from hiring and instead push them to outsource or automate. In aggregate, this process could increase unemployment rates and ultimately torpedo the economy.

The real question is: what do the data actually tell us?

The answer is: a lot.

As an article in Politico recently put it: “an argument frequently raised against increasing the minimum wage is that it lowers employment. But a string of economic studies over the past two decades saw little or no employment impact when minimums were raised at the federal or state level, leaving most economists reasonably confident that the increases [in South Dakota, Nebraska, Alaska, and Arkansas] won’t be notably detrimental in that regard.”

Of course, some economists are worried about the bolder $15 minimum wage hikes in Seattle and San Francisco. The Politico piece quotes a Georgetown economist, Harry Holzer, who said: “I would be reluctant to go above $10 [an hour for the minimum wage]… at that level you do create incentives for employers to either move jobs… or automate more.”

Here’s the bottom line. Irrespective of economic theory, voters are increasingly tired of stagnant minimum wages; they are taking to the ballot box to correct what they perceive to be an imbalance. Of course, fighting for your rights and for fair wages is not always so simple. If you need help battling back against an employer who has harassed you, discriminated against you, or subjected you to tip pool violations or violations of the Fair Labor Standards Act (FLSA), call the Joseph & Kirschenbaum team today at (212) 688-5640, or email us at info@jhllp.com for a free consultation.