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The "Fight for 15" movement to raise the minimum wage has had tremendous momentum in recent months, winning $15-per-hour minimum wages in several cities and then statewide in California and New York. The movement has apparently become so popular that even Hillary Clinton — who had previously refused to endorse a minimum wage higher than $12 — said at Thursday's presidential debate that she'd sign a national $15 minimum wage bill if it reached her desk.
That's unfortunate, because Clinton's first position was the right one. Raising the minimum wage to $15 per hour would mean gambling with the livelihoods of millions of Americans and could produce widespread unemployment in parts of the country where wages are below average.
Indeed, even as Clinton shifted to the left during Thursday's debate, she seemed to be desperately trying to leave herself some wiggle room. She pointed favorably to New York state's $15 minimum wage law, which raises the minimum more quickly in New York City, where average wages are higher, than upstate.
But she's facing such strong grassroots pressure on the issue that she can't bring herself to clearly articulate the implication of that preference: A nationwide $15 minimum wage is a bad policy that could cost millions of low-wage people their jobs.
Even left-leaning economists say $15 per hour is a gamble
A $15-per-hour minimum wage is so high that we don't have any real idea how it would affect the American economy. The all-time high for the national minimum wage, after adjusting for inflation, was about $11 per hour in 1968. Since the 1980s, the national, inflation-adjusted minimum wage hasn't been higher than $8 per hour.
Economists disagree about whether these more modest minimum wages have produced significant job losses. One recent study, for example, found that the most recent national minimum wage hike — between 2006 and 2009 — "reduced employment among individuals ages 16 to 30 with less than a high school education by 5.6 percentage points."
Other economists dispute that. A comprehensive study of state-level minimum wage hikes between 1990 and 2006 by economist Arindrajit Dube and two co-authors found "no detectable employment losses from the kind of minimum wage increases we have seen in the United States."
But when I asked the lead authors of both studies about California's recent move to boost the minimum wage to $15, I found they were on the same page: The increase was so large that the effects are unpredictable. Neither man could rule out the possibility that a $15-per-hour minimum wage would cause dramatic job losses.
One of the most prominent left-leaning economists in the minimum wage debate is Alan Krueger, co-author of a widely cited 1993 paper finding that a modest minimum wage hike in Pennsylvania didn't cost jobs. Krueger has served in the Obama administration and supports raising the national minimum wage to $12 per hour. But in a New York Times piece last fall, he warned that "a $15-an-hour national minimum wage would put us in uncharted waters, and risk undesirable and unintended consequences."
A $15 minimum wage would affect half of workers in some states
A big concern with California's minimum wage hike was that California is a large and diverse state. Some parts of the state — like the city of San Francisco — have high wages and a high cost of living; in these areas, a large majority of workers are already making more than $15 per hour, and employers paying less than that may not have much trouble finding the money to comply with the new wage.
But other parts of California aren't so affluent, and in these areas the higher minimum wage could cost a lot of jobs. Small businesses in cities like Fresno could be forced to shut down, as customers just aren't willing to pay the higher prices needed to cover the higher wage costs.
In March I asked Dube — generally seen as a supporter of a higher minimum wage — if it was a mistake for a state as large as California to try such a big increase. Would it be better to let $15-an-hour experiments in San Francisco and Los Angeles play out?
"If you're risk-averse, this would not be the scale at which to try things," Dube told me.
Of course, that point applies with even greater force to the nation as a whole. The median wage in Fresno was $15.48 per hour in 2015, meaning that almost half of Fresno workers will be affected by California's new minimum wage law — either getting a raise or losing their job.
But as the Washington Post's Catherine Rampell points out, there are four states where the median wage is less than $15 per hour.
States where $15/hour would be higher than current median wage:
— Catherine Rampell (@crampell) April 15, 2016
Mississippi
Arkansas
West Virginia
South Dakotahttps://t.co/ulXsx79QJz
If imposing a $15-per-hour minimum wage on cities like Fresno is a gamble, imposing it on states like Mississippi and West Virginia is an even bigger one. More than half of employees in these states will be affected, and while we can hope most of them will get raises, a significant number could get pink slips instead.
The more cautious position Hillary Clinton took earlier in her campaign — to raise the minimum wage to $12 while waiting to see how the California experiment works out — makes more sense. Boosting the incomes of low-income workers is a worthwhile goal, but it's not worth the danger of throwing millions of people out of work.
