15 Errors in the Fight for $15: It’s Not Fiscally Responsible

No summer is complete without a summer reading list, and SEIU boss David Rolf’s “Fight for $15” is at the top of ours.

Alas, while the book has plenty of entertaining rhetorical flourishes, its commitment to factual accuracy on the issue of wage mandates is lacking. In honor of the campaign that Rolf started, today EPI begins a recurring series that we’re calling “Fifteen Errors in the ‘Fight for $15.’”

The first claim we’ll tackle in Rolf’s book is this: A $15 minimum wage will “substantially reduce dependence on government welfare programs” among poorer Americans.

Specifically, Rolf argues that an increased minimum wage would make poor employees richer, thus moving them off of government assistance. It sounds good in theory, but it simply does not survive in practice.

The nonpartisan Congressional Budget Office estimated in 2014 that a higher minimum would have little net impact (positive or negative) on the federal budget.  Last year, San Diego State University economists examined 35 years of data and found that minimum wage increases cause no net reduction in social welfare spending or program participation. 

There is also powerful electoral incentive to maintain the current size of the benefits rolls, regardless of the wage floor.

After California passed its $15 minimum wage, Assemblyman Kevin McCarty (D., Sacramento) tried to increase the eligibility threshold for a state social welfare program: “Some people with the minimum wage increase, they’re not rich by any means, but they [now] make a little too much to become eligible for our state preschool program, so we adjust the eligibility for the first time in many years.”

In summary, the data don’t support Rolf’s argument, and–even if it did–his allies may be unwilling operate in good faith and allow employees to “lose” those benefits.