In a press conference outside the U.S. capitol earlier in May, Sen. Bernie Sanders (I-Vt.) announced he would introduce a new bill to raise the federal minimum wage to $17 per hour. In a recent op-ed in The Guardian, Sanders suggested a $17 per hour minimum wage was “the right thing to do,” and discussed “address[ing] the scandal of the tipped wage.”
To justify this number, Sanders and Big Labor affiliates used several misleading talking points to support such an inflated federal minimum.
The press conference centered around historic inflation, with Sanders proposing a future $17 per hour federal minimum wage should be further increased according to inflation every year. On the contrary, Bureau of Labor Statistics data shows Sanders’ $17 target has no economic precedent. Increases in the consumer price index since the last increase in 2009 reveal that if the federal minimum wage were indexed according to inflation, it would equal roughly $10.32 per hour today.
Additional economic research also finds drastic minimum wage hikes could contribute to price inflation.
Several speakers at Sanders’ press conference also falsely claimed that minimum wage hikes have no negative impacts on employment. This statement is widely opposed by economists and over three decades of economic research on the topic of minimum wages.
A review of the economic literature spanning 30 years by economists at the University of California-Irvine found a large majority of studies conclude minimum wage hikes cause employment loss, particularly for younger or less-educated employees. In fact, an analysis of Sanders’ last failed proposal for a $15 minimum wage nationwide found the bill could cost more than 2 million jobs nationwide.
In addition, three new studies published this month have pointed to the job-killing effects of drastic minimum wage mandates. A Baylor University study found minimum wage hikes have particularly negative effects on employment for hospitality businesses, an industry that employs the majority of minimum wage employees. What’s more, economists from Cornell University and San Diego State University found that minimum wages have failed to produce any significant effect of alleviating poverty. Finally, an ongoing Federal Reserve Bank of Minneapolis study of the impacts of minimum wage hikes in Minneapolis and St. Paul revealed the cities are experiencing significant jobs and overall earnings loss for affected industries.
For these reasons and more, a large majority of U.S. labor economists opposed a $15 federal minimum wage or higher. Sixty-two percent of economists surveyed by the Employment Policies Institute opposed a federal $15 wage, and 73% of those surveyed opposed proposals to raise wages higher than $15. In their opposition, economists cited concerns that such mandates would spell uniquely bad consequences for youth employees, small businesses, and businesses in the hospitality industry.
Sanders’ previous proposal to raise the federal minimum wage to $15 per hour and eliminate the federal tip credit was rejected by a bipartisan group of Senators concerned about adverse effects on employees.
This time around, Sanders and Big Labor allies are touting the same misleading talking points out of touch with reality.