Last July, the Democratic party pledged to lead the fight for a federally mandated $15 minimum wage. “The current minimum wage is a starvation wage and must be increased to a living wage,” the party’s platform contended. “No one who works full time should have to raise a family in poverty.”
Other champions of the movement to increase the minimum wage — such as “Fight for $15” and the Service Employees International Union — have called attention to the same concern. And sometimes, their voices have been heard: This year, 14 states and Washington, D.C., elected to increase their minimum wages, some through bills in the legislature and others through referenda. (Eight other states raised their minimum wage, too, but solely to adjust for inflation.)
Unfortunately, proponents of minimum-wage hikes have neglected to consider the unintended consequences of such drastic changes to state labor laws.
According to a report published last week by American Action Forum, a center-right think tank in Washington, D.C., the minimum-wage hikes implemented in 2017 (some laws went into effect January 1 and others will go into effect in July) will result in a loss of 383,000 jobs by 2020.
Of the 14 states, four of them — Arizona, Maine, New York, and Washington — are expected to host at least a one-percent reduction in employment by 2020. In Arizona, for example, American Action Forum predicts a 1.7 percent reduction in employment, resulting in 52,000 lost jobs. Similarly, the think tank projects a 1.1 percent reduction in employment in New York (109,000 lost jobs); New York City alone will lose 72,000 jobs. “In 2020,” the report states, “employment in these 14 states and DC combined will be 0.7 percent lower than if the minimum wages did not change.”
Between 2020 and 2025, the American Action Forum expects the economy to lose nearly 1.8 million jobs because of the newly implemented laws to increase the minimum wage. While Vermont may not have immediate effects because it has gradually raised the minimum wage by 12.5 percent ($9.33 to $10.50 by 2018), other states have implemented more radical new laws. California, for example, has a five-year plan to raise its minimum wage from $10 to $15, a change of 50 percent. Sixty-five thousand Californians are expected to be jobless by 2020 because of these new laws. And in Maine, a 60 percent increase ($7.50 to $12 by 2020) will likely result in 9,000 jobs lost and a 1.4 percent reduction in its total employment.
