Bernie Sanders wants to raise the Federal minimum wage to $15 an hour by 2024

The pros and cons of raising the minimum wage

Bernie Sanders demands a minimum wage of $15 an hour

The Raise the Wage Act of 2019 was passed by the House on July 18, 2019.  It would phase in raises to the minimum wage to $15 an hour by 2024.  The bill would index future minimum wage increases to median wage growth.  Currently, the minimum wage is $7.25 an hour; it has not been increased since May, 2007.  Senator Mitch McConnell is not likely to take up the bill in the Senate.  (Ironically, Senator Sanders was chided for not paying his campaign workers an effective minimum wage of $15 an hour - largely because his staff were working, on average, 60 hours a week.  This issue has been rectified.)

The biggest question people have about raising the minimum wage is whether or not it would decrease hiring.  Another question is what would the impact be on different parts of the country that have different pay scales.  Where pay scales are lower, workers would benefit enormously; the businesses that hire the workers, though, would experience a pretty drastic increase in wage costs.

Liberal economists, such as those who work for the Economic Policy Institute (EPI), believe that raising the minimum wage would be good for the economy.

In testimony before the US House of Representatives on February 7, 2019, Ben Zipperer, economist for the EPI, stated that a single parent earning the current wage does not earn enough in full time work to rise above the poverty line.  He also state that if the minimum wage had "kept pace with labor productivity growth since 1968, this year it would be more than $20 an hour."

The EPI cites studies that show that raising the minimum wage would not adversely affect employment.  In one study mentioned, they found:  "In their meta-analysis of 739 estimated effects from 37 published studies on the minimum wage and employment between 2000 and 2015, Wolfson and Benjamin (2016) find 'no support for the proposition that the minimum wage has had an important effect on U.S. employment.'"  (From a 2/5/19 report by David Cooper for the Economic Policy Institute titled "Raising the federal minimum wage to $15 by 2024 would lift pay for nearly 40 million workers.")

On the other side, some economists have argued that increasing the minimum wage, especially in areas where the difference between the current and proposed minimum wage is significant, would adversely affects employment.  In a 9/28/18 article by Adam Millsap in Forbes Magazine, he quotes from a study published in the American Economic Review that maintains that increases in the minimum wage reduce employment in the long run.

The studies' authors, Paul Beaudry, David Green and Ben Sand, found that over a ten year period  "that a 1% increase in wages leads to a 0.3% to 1% decrease in employment rate depending on whether wages increase citywide or only in one industry."  The authors found that most of the loss in jobs is  due to firms closing, rather than layoffs.

The minimum wage debate is complex.  The plan Sanders proposes eases the impact on business by phasing in the increases over several years.  What does not seem to be in doubt is that it is difficult to live on a full time minimum wage job.

On an interesting historical note, Otto von Bismarck created the first social security system in the world - to keep the masses from adopting socialism.  You have to ask yourself, if people cannot afford to live on the minimum wage, what will happen to economic growth, and our internal national security, if working class people having little or no disposable income.