Economists: $15 Federal Minimum Wage Will Cost 2 Million Jobs

Economists: $15 Federal Minimum Wage Will Cost 2 Million Jobs
Rep. Bobby Scott (D-Va.) speaks during a news at the U.S. Capitol in Washington on July 29, 2020. In 2019, Scott introduced a bill that would raise the federal minimum wage to $15 per hour. (Drew Angerer/Getty Images)
Mark Tapscott

An estimated 2 million U.S. jobs would be lost if the federal minimum wage is raised to $15 under legislation approved by the Democrat-controlled House of Representatives and endorsed by former Vice President Joe Biden, according to a new study by two economics professors.

“The Arts, Entertainment, and Recreation and Accommodation and Food Services sectors will account for half of these job losses. Workers aged 16-24 will see the highest proportion of job losses, and the majority of jobs lost will be those held by women,” the study says.

“Tipped workers will also lose a greater share of jobs affected by minimum wage than non-tipped workers—one in three tipped workers affected by this federal minimum wage increase will lose their job,” according to the study.

The study was conducted by economists William Even of Miami University and David Macpherson of Trinity University using a methodology based on economic assumptions provided by the Congressional Budget Office.

The analysis was published recently by the Employment Policies Institute (EPI), a Washington-based think tank that focuses on issues related to entry-level employment policies.

The authors caution, however, that “the impact on job losses in this study does not account for slowed employment growth, and in some cases job loss, in areas where the minimum wage has already been increased to $15.

“In addition, the study only analyzes impacts through 2027, when the federal minimum will reach the $15 mark. Slowed or negative growth may continue past that time, especially for tipped employees, as the federal tipped minimum would continue to rise annually to meet the regular minimum.”

The $15 federal minimum wage was approved by the House last year under the Raise the Wage Act of 2019. The legislation was introduced by House Committee on Education and Labor Chairman Bobby Scott (D-Va.), with more than 200 Democratic co-sponsors.

No House Republicans supported the proposal, which has been bottled up without floor action by Senate Republicans since its passage by the lower chamber. The federal minimum wage would be increased by increments, reaching $15 in 2027.

Democrat former Vice President Joe Biden, whose election challenge of President Donald Trump for the White House remains undecided, made the $15 minimum wage a centerpiece of his campaign’s economic platform.

A spokesman for Scott didn’t immediately respond to a request by The Epoch Times for comment on the study.

During the March 2019 committee markup of the Raise the Wage Act, however, Scott said, “It is my strong, long-held belief that we should make policy based on evidence and research, rather than slogans and soundbites ... studies have shown there is little to no job loss when we raise the minimum wage.”

Scott was referring to studies like that of professors Anna Godoey and Michael Reich of the Institute for Research on Labor and Employment (IRLE) at the University of California–Berkeley.

Godoey and Reich reported last year that in examining the effect of minimum wage increases in low-wage counties, they found “positive wage effects, especially in high impact counties, but do not detect adverse effects on employment, weekly hours or annual weeks worked. We do not find negative employment effects among women, blacks, and/or Hispanics.”

“In high impact counties, we find substantial declines in household and child poverty. These results inform policy debates about providing exemptions to a $15 federal minimum wage in low-wage areas.”

Congressional Republicans such as Sen. Mike Lee (R-Utah), who is chairman of the Joint Economic Committee, and Rep. Neal Dunn (R-Fla.) told The Epoch Times the EPI study confirms what they and the large majority of economists have contended on the issue for decades.

“Research shows that when Democrats raised the minimum wage in 2009, it caused significant, negative effects on the employment and income growth of targeted low‐​wage workers,” Lee told The Epoch Times on Nov. 9.

“That kind of job-killing mandate is not what this economy, nor this country, needs right now.”

Dunn agreed, saying, “It’s the low-end jobs. It doesn’t make sense. I’ve been living through this argument about the minimum wage for most of my life. My father at one point was a White House adviser ... and this was being discussed in the Ford administration as well.”

Dunn’s father, Maj. Gen. John Dunn, was a senior aide and adviser to Gerald Ford while he was vice president and president, and before that to then-Vice President Spiro Agnew prior to Agnew’s resignation in 1973.

“It’s a fundamentally bad idea to make the lowest rung on the ladder too high for people to reach,” Dunn said. “The minimum wage isn’t what people live on, it’s what they start on.”

Contact Mark Tapscott at [email protected]
Mark Tapscott is an award-winning senior Congressional correspondent for The Epoch Times. He covers Congress, national politics, and policy. Mr. Tapscott previously worked for Washington Times, Washington Examiner, Montgomery Journal, and Daily Caller News Foundation.
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