Not Just Big Corporations: Local Govts Up the Ante on Minimum Wage

The “Fight for $15” was started by the Service Employees International Union (SEIU) as a way to boost union membership back in 2012. While the $15 number has become a popular target, the SEIU admittedly picked it because it sounded good, not because it has any significance or economic precedent. Consequently, $15 has become a mainstream target for governments and companies wanting to earn the favor of progressives.

Now advocates want more, and local governments are racing to catch up, leaving hourly-paid employees behind.

  • Rep. Alexandria Ocasio Cortez (D-NY): “[McDonald’s] workers in Denmark are paid $22/hr + 6 wks paid vacation. $15/hr is a deep compromise…”
  • Sen. Elizabeth Warren (D-MA): “…As productivity goes up…the minimum wage today would be about $22 an hour.”(Fact check: According to this logic, productivity among minimum wage occupations actually only justifies a $7.60 per hour minimum wage today.)
  • Rep. Pramila Jayapal (D-WA): “If the minimum wage increased at the same rate as Wall Street bonuses, it would be $33/hour!”
  • SEIU: “It’s time California caregivers earn a $20 minimum wage.”
  • AFL-CIO: “Indexed for inflation the minimum wage would be $24/hr.” (Fact check: Adjusting for inflation would only justify a $8.77 per hour minimum wage in 2021.)
  • In 2019, the New York Times ran a headline that read: “The $15 minimum wage is here. Why we need $33 an hour.” (This is a stark reversal from their previous position, in which the editorial board claimed the “right” minimum wage was $0.)

High-wage headlines popularize the idea of raising wages so high across the board at the local, state, and even federal level – despite the serious harm such mandates would cause for the millions of employees who would lose their jobs and make replacement jobs more difficult to find as a result.

The majority of economic research finds that minimum wage hikes cause job loss for lower-wage employees – and large wage hikes are especially worse. The nonpartisan Congressional Budget Office projected that a $15 federal minimum wage would kill up to 2.7 million jobs across the country. These effects are even worse when the mandates apply to tipped employees too: a new study from economists at the University of California-Irvine finds that a $1 increase in the tipped minimum wage could cause up to 4% job loss across the full-service restaurant sector.

Regardless of the very real consequences, many lawmakers have already taken the bait. Just this week, a West Hollywood city councilman proposed a $17.64 per hour minimum wage for all employees. This is hardly an isolated event.

  • Seattle, WA will raise its minimum wage to $17.27 per hour on January 1, as part of its annual indexing for inflation.
  • Emeryville, CA requires employees be paid at least $17.13 per hour currently, and will index its wage higher still in 2022. Twenty-two other California localities index their wage annually and currently top the $15 mark, including: Berkeley ($16.32), San Francisco ($16.32), Mountain View ($16.30), Sunnyvale ($16.30), Sonoma ($16.00 in January), and Cupertino ($16.00 in January).
  • SeaTac, WA’s current wage is $16.57 per hour, and will be raised again for inflation in January.
  • Denver, CO will raise its wage to $15.87 per hour in January.
  • Flagstaff, AZ is set to increase its minimum wage annually, reaching $15.50 per hour in January and higher in future years.
  • Washington, DC indexed its wage to $15.19 per hour this past year and will raise it again according to inflation in July 2022.
  • Last month, the mayor in Jackson, MI proposed a $15.68 per hour minimum wage for all city employees, together with a $13.32 per hour mandate for businesses in contract with the city that offer health benefits to their employees.
  • A Memphis, TN city councilman proposed a $21 per hour wage for any business seeking tax break incentives from the county. While an initial vote killed the bill this week, council members have expressed support for raising the minimum wage requirements as part of the tax break program.
  • Last year, the Aurora, CO city council deliberated over a $20 per hour wage.
  • In November 2020, Portland, ME voters approved a ballot measure instituting a $15 per hour minimum by 2024, coupled with a time-and-a-half provision during declared emergencies that would amount to more than $18 per hour in 2022 and up to $22.50 per hour by 2024.

Currently, the highest state minimum wage exists in California at $14 per hour today, rising to $15 in January 2022. But the normalization of the $15 minimum wage target and headlines of starting wages two or three times higher than the current $7.25 federal minimum wage has begun to push governments to mandate wages beyond the SEIU’s arbitrary target number.

Lawmakers out-of-touch with economics and individual large corporations pushing the minimum wage debate is dangerous for the least skilled employees’ livelihoods. State and local lawmakers should view the tide of exorbitant wage hikes with caution.