Minimum Wage Again

It has long been a GOP article of faith that raising the minimum wage is a recipe for disaster–that businesses will fire some workers in order to raise the pay of others, and that the increased wages will be passed along to consumers and that the higher prices will depress demand.

That last warning has been especially shrill when the effort to raise the minimum wage has focused upon food service workers. (Five cents more for a McDonald’s hamburger? No one will buy it!)

It doesn’t matter that in places that have ignored the naysayers and raised the minimum wage, these disasters have failed to materialize– ideology ignores evidence. (There’s an analogy between the hysteria over raising the minimum wage and the equally fervent belief that cutting taxes on rich people will generate job growth, despite the fact that it has never, ever happened.)

A recent article from Business Insider–not one of those “socialist” publications–confirms the hollowness of these economic chestnuts.

New York City restaurant workers saw their pay increase by 20% after a $15 minimum-wage hike, and a new report says business is booming despite warnings that the boost would devastate the city’s restaurant industry.

As New York raised the minimum wage to $15 this year from $7.25 in 2013, its restaurant industry outperformed the rest of the US in job growth and expansion, a new study found.

The study, by researchers from the New School and the New York think tank National Employment Law Project, found no negative employment effects of the city increasing its minimum wage to $15.

The article noted that numerous restaurant workers saw a pay increase of 20% to 28% as a result of the raise in the minimum wage, and that it represented the largest increase for  low-wage workers since the 1960s. New York’s decision to raise the minimum wage had been met with considerable skepticism and warnings of dire consequences.

Across the US, the restaurant industry has the most to lose from a $15 hike. The Bureau of Labor Statistics found that in 2016 the food-preparation and serving industry employed the most workers paid at or below the minimum wage, at 1.1 million. Sales, the industry with the next-highest low-wage workforce, employed 200,000 such workers.

“New York City’s restaurant industry has flourished overall,” the study said.

Excuse me while I repeat–once again–my mantra: public policies should be based on evidence. Theories are fine–they’re even necessary–but when evidence demonstrates that a theory is flawed, the evidence should prompt revision of the theory.

Apparently, however, that’s just too painful…..

Shelia Kennedy