A new and ambitious piece of legislation that would raise the federal minimum wage to $12 by 2020 has been introduced, and both sides of the aisle are putting up the familiar arguments.
The Raise the Wage Act, introduced by Senator Tim Kaine, Senator Patty Murray and 31 other Senate members on Thursday, aims to raise the minimum wage to $8 next year, adding $1 for each year thereafter to get to $12. After 2020, the set minimum wage would be indexed to be half of the U.S. median wage.
The law will also aim to gradually eliminate the subminimum wage for tipped workers, whose poverty rate is almost twice as high as the rate of non-tipped workers nationwide.
“No one who works full time should live in poverty,” said Sen. Tim Kaine in his announcement. “This incremental increase in the minimum wage will be substantial enough to lift a family of four out of poverty and will be gradual enough for employers to plan ahead. I’m proud to introduce this legislation because raising the minimum wage is an important tool to help hardworking Americans get a fair shot at moving on up the economic ladder.”
The Economic Policy Institute estimates that 37.7 million workers would benefit from the cumulative five-year increase. It is projected to also boost the economy by giving businesses customers with more spending money, and the White House websiteboasts quite a few pictographs to illustrate the benefits of the legislation by state.
Many right-wing analysts, like this one at Forbes, say that the increase in minimum wage would not simply bring more money to the poor, but would in fact cause a million people to lose their jobs due to companies’ inability to afford low-wage workers. The argument is as old as minimum wage itself, and continues to be the central focus of conservatives, regardless of the evidence to the contrary.
A 2013 study by the Center of Economic and Policy Research which found there was no discernible effect on employment when raising the minimum wage. More recently, a book entitled What Does the Minimum Wage Do? by Dale Belman and Paul J. Wolfson used rigorous meta-analysis to confirm that “increases in the minimum wage raise the hourly wage and earnings of workers in the lower part of the wage distribution and have very modest or no effects on employment, hours, and other labor market outcomes.”
Belman and Wolfson also mention in their book that an important absorption mechanism for raising the minimum wage is more efficient production from better-paid workers, which leads to lower turnover, fewer vacancies, and a more highly motivated staff investing in brandable domain names.
Even President Obama’s decision to raise the minimum wage of federal contract workers to $10.10 an hour in 2013 met a lot of opposition from the right side of the aisle, even though reports of the progress stemming from that action have been positive. So it’s likely this wider and more ambitious legislation will have its hands full.