Another election cycle means another round of politicians calling for a higher minimum wage. Officials and candidates at both the state and national levels, including both the Governor of Louisiana and the Democratic-controlled U.S. House of Representatives, have recently expressed their support for raising the minimum wage.
Today, the House passed the Raise the Wage Act in a 231 to 199 vote, which would set a $15 federal minimum wage by 2025. Supporters of the proposal used the vote to push the typical rhetoric of helping those in poverty and providing a “living wage” for workers.
Helping people find the resources to provide for themselves and their families is indeed a laudable effort, but the minimum wage is not only a blunt instrument to address this issue, it’s counterproductive and, in fact, hurts those most in need.
As the non-partisan Congressional Budget Office (CBO) recently estimated, phasing in a national $15 minimum wage by 2025 will be devastating for millions of Americans trying to climb the economic ladder. The CBO lays out a variety of scenarios, including the potential for 3.7 million workers to lose their jobs. The CBO’s median estimate has job losses at 1.3 million, or roughly the number of people working in the entire state of Nevada.
While the CBO analysis should have sobered those who passed the Raise the Wage Act several recent attempts at implementing a raised minimum wage paint an even more troubling picture of where the US would head if it became law.
The city of Seattle was one of the tips of the spear in the “Fight for 15” movement. The Seattle City Council was so confident that the effects of hiking the minimum wage would be positive, it commissioned a study to see the results of raising the minimum wage to $13 an hour, part of the city’s gradual increase to $15.
The results were anything but good news for the workers of Seattle.
The study, which was later disavowed by the City Council, showed devastating effects to those the policy was intended to help. To cope with the increase in labor costs, employers cut hours for their employees by 3.5 million in a single quarter, costing more than $120 million in lost wages. This translated to an average worker losing $1,500 of income per year.
So much for raising worker income.
Similarly, New York City hasn’t been immune from the damage of a higher minimum wage. For the first time in more than a decade, the city has lost jobs in the service industry- nearly 6,000 of them. During the same timeframe that these job losses were occurring, the number of restaurants in the city increased. Imagine how devastating job losses would’ve been if the number of restaurants had decreased.
The stories out of Seattle and New York demonstrate how, despite the good intentions behind them, raising minimum wages have profoundly negative effects on jobs markets. For those trying to get their feet set on the first rung of the employment ladder, higher minimum wages are cruelly pulling it out from under them and robbing them of jobs and opportunity.
Considering the harmful effects of a higher minimum wage on the high cost of living cities of Seattle and New York City, imagine the devastation it would inflict on Louisiana. Louisiana currently has the 7th highest unemployment rate in the nation and added only 1900 jobs last year, which is second lowest in the nation. If Louisiana’s advantage as a low-cost state was removed due to either a state or federally mandated minimum wage increase, the damage caused to those seeking jobs and opportunity here would be devastating.
While raising the minimum wage may make for good politics in certain circles, it continues to equate to bad policy. Politicians need to be doing everything in their power to remove barriers to job creation and allow for people to gain the skills and experience needed to climb the economic ladder. A higher minimum wage does the exact opposite.
Whether on the state or national level, raising the minimum wage is something the people and economy of Louisiana simply can’t afford.