One Size $15 Minimum Wage Doesn’t Fit Most

NEW YORK, NY - NOVEMBER 10: New York Governor Andrew Cuomo (C) speaks during as low wage workers and supporters protest for a $15 an hour minimum wage on November 10, 2015 at Foley Square in New York, United States. The protesters are demanding action from state legislators and presidential candidates to raise the minimum wage to $15 USD an hour. (Photo by Cem Ozdel/Anadolu Agency/Getty Images)
Cem Ozdel/Anadolu Agency/Getty Images

America is very diverse. What works for one person or family doesn’t necessarily work for another, and what works for one city or state doesn’t necessarily work for others. 

This is particularly true for minimum wage laws because costs of living vary significantly across the United States. 

The federal government recognizes these differences (albeit imperfectly) through locality-based adjustments to the General Schedule pay scale which increases some workers’ pay by as much as 40% due to higher costs-of-living.

But lawmakers pushing a $15 nationwide minimum wage are failing to recognize these differences, and while no city or state can escape the unintended consequences of a $15 minimum wage, some areas will be especially hard-hit.

In Mississippi, for example, the median wage is $15 per hour. That means that half of all workers in Mississippi earn less than $15 per hour, and half earn more. 

Imposing a $15 minimum wage on Mississippi would be like imposing a $21.24 minimum wage on California, a $24.14 minimum wage on Massachusetts, and a whopping $35.74 minimum wage on DC.  

A $35.74 minimum wage in DC would have a lot of lawmakers scrambling to run their offices, considering they currently pay many congressional staffers $20 per hour or less

Puerto Rico demonstrates the consequences of an excessively high minimum wage. The federal $7.25 minimum wage equals 72% of the island’s median wage of $10.13. That’s forced many people out of employment entirely—the island has an abysmally low 40% labor force participation rate, and over 40% of residents receive Medicaid and food stamps. 

Already fraught with a financial crisis, still recovering from two devastating hurricanes, and continuing to struggle through the consequences of covid-19, a $15 minimum wage would be overwhelming for Puerto Ricans.

It’s one thing if cities like Seattle and San Francisco, or even states like New York and Illinois want to impose $15 minimum wages on their workers and businesses. If they set minimum wages above market wages, workers and employers who are priced out of the market at least have the option of going elsewhere to earn a living. 

And that’s already happening. According to the U.S. Census Bureau, the seven states plus DC that had passed $15 minimum wage laws as of 2019 averaged net migration of -50,000 in 2019 while the 20 states with a $7.25 minimum wage averaged net migration of +25,000.  

A nationwide $15 minimum wage would eliminate that option of moving.

Perhaps that’s why cities and states that have already raised their minimum wages to $15 want to impose the same increases on everyone else. It reduces the competition. 

That’s why unions fight for $15 minimum wages (and then try to exempt themselves), and why big companies like Amazon support a $15 minimum wage after they’ve automated their own low-wage jobs.

But that’s not fair to states and local governments that want to keep income opportunities open for everyone. And it’s not fair to workers and employers who are happy with the work they could lose, nor to their customers who may lose access to products and services that they desire, at prices they can afford.

Policymakers in DC should leave minimum wage decisions to local policymakers and instead focus on policies that will help all workers earn higher incomes by creating more value rather than by taking away the jobs and incomes of others. 

Rachel Greszler is research fellow in economics, budget, and entitlements in the Grover M. Hermann Center for the Federal Budget, of the Institute for Economic Freedom, at The Heritage Foundation. Read her research.

The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.

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