Why “no job loss” is the wrong standard for setting the right wage floor.
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September 5, 2016 | fter experiencing substantial wage gains during the shared-growth decades of the postwar era, American workers have increasingly confronted labor markets of precarious jobs that pay too little to provide a minimally decent standard of living. This reality has finally broken through politically in the movement for a $15 federal minimum wage. However, some prominent economists contend that a minimum wage high enough to provide a decent standard of living poses too high a risk of job loss.
But this fear is purely speculative; we have no reliable evidence that a $15 wage floor, phased in over four to six years, would cause declining employment opportunities for low-wage workers. Indeed, the wage threshold at which substantial employment effects are likely to occur may be considerably higher. What we do know is that a $15 wage would have big impacts on the living standards of millions of working families. The recent commitments of California and New York state to establish a $15 minimum are estimated to increase the income of more than one-third of the workers in each state. The effects on consumer demand, and consequently on other low-wage employment, will be enormous.
David Howell is a professor of economics and public policy at The New School (New York City)