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Reframing the Minimum-Wage Debate

Why “no job loss” is the wrong standard for setting the right wage floor.

David Howell, the American Prospect If you like reading this article, consider joining the crew of all reader-supported Evergreene Digest by contributing the equivalent of a cafe latte a month--using the donation button above—so we can bring you more just like it. 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)

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