Friday, January 20, 2017

Low-Wage Workers Are Getting A Raise, And Economists Are Getting An Experiment

From FiveThirtyEight:

The new year brought raises — sometimes big ones — to millions of low-wage workers. It also begins the country’s first large-scale experiment in the economic effects of a double-digit minimum wage.

According to data collected by the National Employment Law Project, a workers-rights advocacy group, 19 states and 21 local jurisdictions raised their minimum wages at the start of 2017. Many of those increases were small cost-of-living adjustments, but some of them were dramatic. Arizona, where voters approved a wage hike on Election Day, raised its minimum wage by nearly $2 an hour, to $10 from $8.05... Some cities set the bar even higher...

Low-wage workers are understandably cheering the increases. So is the union-backed "Fight for $15" movement, which defied the odds to put the minimum wage back on the political agenda. Economists, though, are watching more warily. Researchers disagree about how minimum-wage hikes affect the economy, but most studies have found that wage increases have at most a small impact on total employment — that is, there is little evidence for the claim that the minimum wage is a major job-killer.

Those studies, however, have generally been based on minimum wages that were lower — and wage hikes that were more gradual — than the ones many cities and states are seeing now...

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