Whenever a city or state votes to raise the minimum wage, or has its lawmakers pass such a bill themselves, the same old prognostications of doom and gloom inevitably follow. Business groups that have a vested interest in keeping wages depressed say these decisions will cost companies lots of jobs, and end up hurting the people they're intended to help - effectively, that it's better to pay low-earning Americans as little as possible.
Time and again, however, the opposite is proven to be true. In most states that choose to raise the minimum wage well above and beyond the federal level, there is no negative impact on the economy in the long term, even if there is the occasional short-term loss of a relatively small number of jobs, according to analysis from U.S. News and World Report. In fact, the three states with the highest minimum wages today - California, Massachusetts and New York - are also the three states with the strongest economies and most fertile ground for businesses.
That's echoed in new research from the University of Massachusetts - Amherst, which found that raising the minimum wage (in 138 cases over the last several years) not only improves living conditions for the poorest earners, but also those who get a raise just above the minimum as well, the report said.
A perfect example
In New York City, where legislators voted to raise the minimum wage to $15 per hour, there were warnings from restaurant groups that many of those earners would have to be laid off en masse. But a recent study from the New School's Center for New York City Affairs and National Employment Law Project found the opposite to be true: From 2013 to 2018 - during which time the city's minimum wage rose from $7.25 per hour to $15 - the restaurant industry in the Big Apple saw employment rise at a faster rate than the rest of the private sector.
Not only did job opportunities rise, but so too did the number of restaurants in the city, as well as the obvious increase in average wages for workers, the report said. Meanwhile, 12 other major cities across the country that saw no minimum-wage increases over the five-year period didn't see the substantial gains New York City did. In fact, on an inflation-adjusted basis, people earning in the lowest one-third of the city's workforce saw wage gains of 8.5 to 15%, the largest increase in a half-century.
Another success story
Seattle has been on the forefront of this issue for years, having voted to raise the minimum wage to $15 per hour in 2015. As with New York, there was significant pushback from business groups, and restaurants in particular, but in the three years since, the number of restaurants and bars in the city has surged by 24,000, according to Vox. On the other hand, job creation for these low-paid positions did stagnate somewhat - even as Seattle saw job growth in other areas - but workers who were already employed saw pay rise with little effect on the number of hours they worked.
Any companies concerned about rising wages should keep in mind that higher pay and better benefits are a great way to ensure they can continually attract and retain top talent.
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