Raise The Minimum Wage To $12 An Hour

Higher Wages Would Encourage More Automation and Online Shopping

Democrats want to raise the minimum wage to $15 an hour to address inequality, but that might not be the best way to fix that problem.

Conservative—and many politically moderate—economists don’t like governments fixing prices above what market forces would require, because it wastes resources—too much milk from dairy price supports and too much unemployment from the minimum wage.

Sculpture, Art, Breadline, Bronze, Depression, 1930

Image Source: Pixabay

Longitudinal studies show moderate increases in minimum wages don’t necessarily cause immediate bleeding of jobs to neighboring jurisdictions. However, substantially increasing the minimum in low-income regions—like rural Mississippi or upper Michigan—would be quite different than nudging wages a bit in economies likely to enjoy robust growth as COVID recedes—like metro areas in Florida and Texas.

In the latter places, wages paid starting workers are generally closer to $15 an hour already and the effects of the current federal standard on labor markets are minimal or in some places nonexistent.

Among voters the idea gaining traction is that it is better to assist the working poor by offering higher paying employment opportunities than enhanced government benefits financed with increased taxes on more affluent Americans. Conservative-leaning Florida recently approved a $15 minimum wage, and 30 states and the District of Columbia have enacted higher minimum wages than the federal standard.

In places like San Francisco and Seattle economic studies documented that abruptly raising the minimum wage caused significant restaurant closures and job losses.

Dramatic shifts disturb wage patterns for workers further up the wage ladder. For example, it’s tough to raise the pay of a counter clerk at McDonald’s $2 an hour without also raising the pay of the shift manager.

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