Does a National $15 Minimum Wage Make Sense?
Democrats are divided over a new bill that would raise the federal minimum wage to $15 per hour
A sharp — and familiar — divide has emerged in the Democratic party over a key policy position: the minimum wage.
According to the Washington Post, a “sizable majority” of House Democrats support the Raise the Wage Act, which would increase the federal minimum wage to $15 by 2024. A smaller group of centrists, many from rural areas, instead support legislation introduced by Alabama Representative Terri Sewell: the Paying Hourly Americans Stronger Earnings (PHASE) Act. This bill would establish five different minimum wage tiers across the country, with the local minimum wage calculated based on regional cost of living.
While few Republicans support even modest increases in the minimum wage, Democrats are mostly united in their belief that the federal minimum wage is due for an increase. It was last raised back in 2009, to $7.25. In fact, the real value of the minimum wage, when adjusted for inflation, has fallen dramatically since its peak in the 1960s: Single, full-time minimum wage workers now earn barely enough to put them above the federal poverty line.
The intraparty disagreement concerns the magnitude of the increase. Basic economic theory holds that increasing the minimum wage will result in a decrease in jobs for minimum-wage workers. Faced with higher labor costs, employers may ask existing workers to take on more tasks; in some industries, employers may even turn to automation. Democratic opponents of the Raise the Wage Act worry that raising the minimum wage so drastically and so suddenly will be economically devastating for low-wage, rural areas. Advocates of a $15 national wage disagree, saying that big rural employers — like Walmart and McDonald’s — can afford to pay workers more and that rural Americans deserve a living wage, too. Sewell’s proposal, they argue, would consign parts of the country to permanent poverty and offers many people very little in terms of wage increase.
So who’s right? That depends on just how healthy you think the economy of rural America is.
Last month, researchers David Cooper and Heidi Shierholz of the Economic Policy…