Bleeding Heart Lefties Right About Minimum Wage All Along, Says New Study

Increasing the minimum wage increases both earnings and employment.

For years, we have been told, over and over again, that if the minimum wage is raised that businesses won't be able to afford to have employees, and they will have to charge the rest of us incredibly high prices in order to keep any employees at all. For some, the pandemic "proved" this, as inflation rose around the same time that people started refusing to work for starvation wages.

But a new working paper published by researchers at UC Berkeley actually shows that raising the minimum wage has a positive effect not only on people's earnings but also on employment in general. This impact, it turns out, is even more profound in areas that do not already have higher wages.

“Similar to @joseazar, @EmilianoHuetV, @mioanan, @Bledi_Taska and @TillvonWachter, we show that lower-wage counties have *more* to gain from MWs 5/N”

— Justin C. Wiltshire (@Justin C. Wiltshire) 1683141812 

Via the Institute for Research on Labor and Employment:

 

Our bin-by-bin analysis of minimum wage effects on all California jobs throughout the wage distribution supports our finding no disemployment effects. The reduction in the number of jobs just below a new minimum wage is nearly exactly offset by the increase in the number of jobs just above the new standard. We do not find effects on high wage jobs, indicating that our findings do not result from uncontrolled confounders. Minimum wage increases result in higher earnings at the 10th percentile, but not at the 50th percentile. In other words, higher minimum wages reduce earnings inequality. These results for all workers, in addition to our results for full-service restaurants, teens and low-wage counties, show that the effects of high minimum wages were consistent even outside of fast food.

Our finding of significant positive employment effects has precedents in the U.S. minimum wage literature. Katz and Krueger (1992) and Card and Krueger (1994, 2000), who looked only at fast food restaurants, also found substantial evidence of positive employment effects

This new information comes on the tail of Sen. Bernie Sanders's recently introduced legislation that would raise the national minimum wage to $17 an hour,which is much closer to a living wage for a large portion of the US. Yes, it used to be that we were fighting for $15, but that started literally 10 years ago and $15 then is worth $19.66 now . Of course, our federal minimum wage is $7.25 per hour. If it had merely kept up with inflation, it would now be $10.25. That is pretty bad!

This idea does run very contrary to what people, especially Americans, tend to think of as "common sense." People very much believe that keeping wages low keeps prices low and therefore more affordable to everyone. The first thing detractors always say when talking about raising the minimum wage is "Oh yeah? Do you want to pay $35 for a hamburger at McDonalds?" But when wages are as depressed as they have been for a long time, things actually become more strained and crunched for everyone regardless of the official cost of things.

For the most part, businesses owned and operated by the middle class rely on people having some amount of disposable income — independent stores, bars, restaurants, salons, etc. Most "basic necessities" — like groceries, less expensive clothing, etc. — are sold by businesses belonging to enormous corporations owned by the wealthy. The more money one has, the more they can buy in bulk, which allows them to keep prices down while still turning a profit. A regular person could not go out and start their own Target tomorrow, because their cost-per-unit would be much higher.

This would be why big box retailers drove smaller retailers out of business.

But the more disposable income people have, the more they are able to spend money at the kind of businesses that are more likely to be operated by the less wealthy, which means that those places will have to hire more people in order to keep up. It will also lead to more money for workers who rely on tips or commissions. If regular people don't have any money and cut back on going out as a result, those places will have to tighten their belts and hire fewer people. They may even raise their prices and try to appeal to those with a higher income level and more disposable income.

The more compacted and crowded it is at the bottom of the income/wealth ladder, the harder it is for people to move around and the harder it is for them to move up. The more that kind of gets loosened up, the more room people have to breathe and the more opportunity they have.

Let's look at it this way. The people at the bottom, the people making minimum wage, are frequently so crunched that they have to rely on help from the government to afford basic necessities like food, rent, utilities, etc.. Most of these people are working for very large, very rich corporations, which means, really, that taxpayers are subsidizing the salaries of their employees — who would very likely be unable to work at these places if they had no food, nowhere to live, no phone, and no transportation. The people just above them have money for basic necessities but not much on top of that — so, bread, but no roses.

This is a lot of people. A recent study found that half of Americans have less than $250 a month in disposable income . Another study found that 44 percent of us could not cover a $1000 emergency. Meanwhile everyone is walking around, scratching their head, wondering why we have a homelessness crisis? Is it because people hate the rule of law and want to cause chaos and do drugs or perhaps because it is now very hard to find a job that will pay them enough to live anywhere?

A 2022 study found that 1 in 3 adults in the United States is making less $15 an hour, when even in Mississippi, the living wage for one adult person with no dependents is $15.42 . How are we supposed to have a functioning economy this way? How are we supposed to have a functioning economy at all when the federal minimum wage is half of what it costs for one person to survive in Mississippi?

Clearly, we cannot.

 Do your Amazon shopping through this link, because reasons .

Wonkette is independent and fully funded by readers like you. Click below to tip us!