Democrats unveiled a new economic plan Monday billed as “A Better Deal” that aims to ingratiate the party with the working class by pushing for a federally mandated $15 minimum wage.
The Democratic leadership is relying, in part, on the national $15 minimum wage to win back America’s working class after the 2016 election cycle proved their inability to counter the populist economic message embraced by the GOP, and subsequently, America’s blue collar voters.
Democrats hope to regain the support of the working class by casting the $15 minimum wage push as a return to prioritizing the rights of workers over those of corporate interests. But their strategy discounts the problematic economic realities that have become apparent in cities like Seattle and San Francisco, which have recently implemented incremental minimum wage increases.
Michael Saltsman, managing director at the Employment Policy Institute, called the plan a “backward approach to building the economy and creating jobs,” arguing Democrats will hurt job growth by mandating the $15 minimum wage and then seek to curtail some of that damage through tax breaks.
“What we know about the $15 minimum wage is that, for full time workers they end up working fewer hours and for part time workers, many of them end up losing their jobs,” Saltsman told the DCNF.
Saltsman cited studies conducted in Seattle and San Francisco, two cities which have begun incrementally increasing their minimum wage in an effort to ultimately reach $15 per hour. The studies show local businesses are struggling to adapt to the increased burden of an increased government mandated wage.
One such study, conducted by Harvard Business School, demonstrated that increases in minimum wage lead to increased restaurant closures, especially among cheaper, lower quality restaurants, which employ a disproportionate share of minimum wage workers. The study, released in April 2017, found “A $1 increase in the minimum leads to a 14% increase in the likelihood of exit for a 3.5-star restaurant.”
A similar study conducted by the University of Washington (UW) found that low-wage workers experienced a 9 percent decrease in work hours after Seattle raised the minimum wage to $13 per hour in 2016.
Minimum wage in Seattle currently stands between $11 and $16 per hour depending on the size and location of the business, but all firms will be required to reach $15 per hour by 2021. According to the study, released in June, workers lost an average of $125 per month as a result of the 2016 $13 per hour wage mandate.
Saltsman pointed out that if San Francisco and Seattle are struggling to absorb substantial minimum wage increases, then more economically stagnant midwestern cities will likely face more dramatic obstacles.
Researchers at the Economic Policy Institute have criticized the UW study, arguing it “suffers from a number of data and methodological problems that bias the study in the direction of finding job loss, even where there may have been no job loss at all.” One central criticism alleges UW researchers skewed the results by excluding businesses with multiple locations, a group that comprises roughly 40 percent of Seattle’s work force.
Regardless of the implications of the increasing the federal minimum wage Saltsman is skeptical of the Democrats’ prospects for turning the platform into actionable legislation.
“They’re not going to have support of their entire caucus,” Saltsman said. “Democrats are going to see an increasingly dour set of headlines about what happens when you raise the wage that high.”
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