Sean Higgins of the Washington Examiner looks into one of the political left’s latest priorities: a $15 per hour minimum wage.
The push to raise the national minimum wage to $15 an hour has caught fire among Democrats. Once considered politically unrealistic even by many on the Left, it has since been approved in cities such as Los Angeles and San Francisco.
Democratic president candidate Bernie Sanders has introduced Senate legislation to make $15 the federal rate in four stages by 2019, up from the current level of $7.25. A House version has 37 co-sponsors. Even Democratic presidential frontrunner Hillary Clinton has endorsed the idea, albeit not as broadly, arguing that cities like L.A. were right to adopt it.
But nobody really knows what a $15 minimum would do to the economy. Past increases in the federal minimum wage were incremental. There is no precedent for raising it to the level being discussed, more than double its current rate, economists note.
“We are certainly moving into unknown territory with an increase of this size,” said Douglas Holtz-Eakin, former director of the Congressional Budget Office under President George W. Bush and now president of the American Action Forum, a conservative leaning think tank. …
… “There is no way of ever coming up with a study that is 100 percent convincing because there are too many variables involved,” said Dan Mitchell, senior fellow at the Cato Institute. “You ask five economists and you’ll get nine answers — and they will all be estimates.”
The variables include questions like at what point would the rising economic cost of labor spur employers into even greater automation? How much inflation would the rising wages create, eliminating the gains from the increases?
Holtz-Eakin co-authored a paper in June with the conservative Manhattan Institute using three economic models to estimate the impact of a $15 minimum. He found that the hike likely would eliminate between 3.3 million to 16.8 million jobs and would increase low-incomes workers’ wages by $49.6 billion or possibly cost them as much as $93 billion due to job losses. The wide range of results indicates the difficulty in making a forecast.
