Employee groups focus on lifting minimum wage to $15 per hour

Employee groups across the United States have held meetings to discuss their strategy to achieve the goal of a blanket $15 per hour wage for workers across the country. The current minimum wage varies drastically by state, and is as low $7.25 per hour.

As of October 2016, there are 29 states with a minimum wage higher than the federal minimum. From 2014 to 2015, nine states increased their minimum wage levels through automatic adjustments, while increases in 11 other states occurred through referendum or legislative action.

In real terms, the federal minimum wage peaked near $10.00 per hour in 1968, using 2014 inflation-adjusted dollars.

Beginning in January 2017, Massachusetts and Washington state have the highest minimum wages in the country, at $11.00 per hour. New York City’s minimum wage will be $15.00 per hour by the end of 2018. There is a racial difference for support of a higher minimum wage with most black and Hispanic individuals supporting a $15.00 federal minimum wage, and 54% of whites opposing it. In 2015, about 3 percent of White, Asian, and Hispanic or Latino workers earned the federal minimum wage or less. Among Black workers, the percentage was about 4 percent.

The law of demand states that—all else being equal—raising the price of any particular good or service will reduce the quantity demanded. Thus, neoclassical economics argues that—all else being equal—raising in the minimum wage will have adverse affects on employment.

Conceptually, if an employer does not believe a worker generates value equal to or in excess of the minimum wage, that worker will not be hired or retained.

Empirical work on fast food workers in the 1990s challenged the neoclassical model. In 1994, economists David Card and Alan Krueger studied employment trends among 410 restaurants in New Jersey and eastern Pennsylvania following New Jersey’s minimum wage hike (from $4.25 to $5.05) in April 1992. They found “no indication that the rise in the minimum wage reduced employment.”

However, a 1995 re-analysis of the evidence by David Neumark found that the increase in New Jersey’s minimum wage actually resulted in a 4.6% decrease in employment. Neumark’s study relied on payroll records from a sample of large fast-food restaurant chains, whereas the Card-Krueger study relied on business surveys.