With some Sioux Falls activists considering placing a $15/hour minimum wage on the 2020 ballot, we may get the chance to hear the Novstrups again bleating that keeping wages low provides opportunity and raising wages hurts workers. If such bleatings arise again, we can add to our rational responses this new working paper on minimum wage effects in low-wage areas published by the Institute for Research on Labor and Employment at the University of California–Berkeley. Looking at county-level data nationwide since 2005, researchers Anna Godøy and Michael Reich find higher minimum wages relative to local median incomes doing exactly what they are intended to do, helping people get out of poverty without hurting anyone’s hours:
Our results generally suggest the presence of positive wage effects. We do not detect adverse effects on employment hours or weeks worked, but we do find reduced household and child poverty in counties with high relative minimum wages, up to .82, and as well in areas with especially high bites. We also do not find negative effects among blacks, Hispanics and women…. The results have self-evident policy implications [Anna Godøy and Michael Reich. (2019). “Minimum Wage Effects in Low-Wage Areas,” IRLE Working Paper No. 106-19, 2019.06.26, p. 4].
Higher minimum wages are good for workers. Imagine that.
By the way, among OECD nations, the United States has the lowest minimum wage relative to either median or mean wage. In 2017, our national $7.25/hour minimum wage was only 34% of our median wage and 24% of our mean wage. In the other 27 countries in this dataset, the minimum wage averaged 51% of the median wage and 40% of the mean wage.