There was good news and bad news on the minimum wage front in President Biden’s pre-Super Bowl interview with CBS. Under the Senate’s rules, he conceded, there is virtually no chance that Democrats’ bid to more than double the federal minimum wage to $15 an hour will be included in the $1.9 trillion COVID-19 relief package now making its way through Congress. That was the good news. The bad news was that Biden intends to push for the higher minimum wage as a separate piece of legislation, since “all the economics show that if you do that, the whole economy rises.”
Unfortunately, that isn’t what “all the economics show.” What they really show — what they have always shown — is that when government raises the lowest hourly wage at which a worker may lawfully be hired, a lot of people lose their jobs. For decades, politicians and pundits have been debating the issue, and for decades reality has been rendering a consistent verdict: Artificially hiking the minimum wage causes the most vulnerable workers in society to lose their jobs.
“Look, no one should work 40 hours a week and live below the poverty wage,” Biden said on CBS. “And if you’re making less than $15 an hour, you’re living below the poverty wage.” In truth, only about 1 percent of full-time workers make the minimum wage, and a full-time job at $15 an hour would actually put a single worker well above the poverty line. But Biden’s larger point is certainly true: In most of America, it is hard to live on less than $15 an hour.
It is infinitely harder, however, to live on $0 an hour. And that is what many of the least-skilled, most precarious workers in America will be making if the hourly minimum wage climbs by more than 100 percent.
This isn’t an ideological talking point. It is an almost wholly noncontroversial proposition, supported by a vast empirical literature on the consequences of minimum wage laws. That literature is as old as the first federal minimum wage — established by Congress at 25 cents in 1938, the law instantly caused tens of thousands of unskilled Black Americans to be thrown out of work. And it is as recent as a fresh study released Monday by the impartial Congressional Budget Office.
In a headline, the Globe spotlighted the new study’s most important finding: “Minimum wage hike to $15 an hour by 2025 would result in 1.4 million unemployed, nonpartisan Congressional Budget Office says.” To be sure, many workers would see an upward bump in their paychecks. But those raises would come at the expense of the nation’s most vulnerable employees — the ones who are employable at $7.25 an hour, but whose minimal skills, poor schooling, or geographic location makes it untenable for an employer to keep them on the payroll at more than twice that sum.
With the best will in the world, Congress cannot make the value of anyone’s labor leap from $7.25 an hour to $15.00 an hour merely by passing a bill. Nor can it repeal the Law of Demand: If lawmakers make it more costly to employ low-skilled workers, then fewer low-skilled workers will be employed. Advocates use the language of justice and compassion to press for a higher minimum wage, but there is nothing just or compassionate about consigning 1.4 million Americans to joblessness.
Minimum wage laws were born in racism. They were devised more than a century ago with the undisguised intent of pricing Black workers out of the labor force. Early minimum wage floors were also championed by eugenicists, who saw them as an aid to their goal of eliminating what they regarded as inferior human beings.
To supporters of minimum wage laws today, such views would be repugnant. But the economic impact of such laws hasn’t changed. They still make it more expensive to hire marginalized workers. They still penalize Americans with few skills, no experience, inferior education, or a weak social network. Lawmakers’ objective may be benevolent. Their impact is anything but.
Minimum wage jobs are the first rung on the ladder to financial security. The lower that rung, the more workers who can reach it and move up from there to the next rung, and then the next. If Congress raises the minimum wage, that first rung will be pushed higher. And 1.4 million vulnerable workers will end up unemployed.