salon: 1) Myth: The minimum wage was never supposed to be a living wage This is probably one of the most dangerous—and easy to debunk—myths about the minimum wage, which was championed by Franklin D. Roosevelt beginning in 1933. During an address FDR gave about one of his many economic salvation packages, he explained that “no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.” 2) Myth: An increase in the minimum wage won’t help anyone if all other costs go up, too One assumption about increasing the minimum wage is that it will force to the cost of living to increase at the same rate, and in doing so, we’d really just be speeding up inflation. This isn’t really how economics works. A 2013 study by the Chicago Fed found that increasing the minimum wage even just to $9 would increase consumer spending by $28 billion. When spending—i.e. demand—increases, manufacturers and other purveyors of goods and services can actually charge less or at least avoid increasing their prices, because they’re increasing overall revenue. 3) Myth: An increase in the minimum wage is bad for employers Paying a higher wage to employees can also help employers cut costs in other ways, according to the Center on Budget and Policy Priorities. “Beyond simple supply and demand theory,” reads a comprehensive report on the economics of raising the minimum wage, “increasing the minimum wage may also spur businesses to operate more efficiently and employees to work harder.” 4) Myth: $15 is a random number “Why not $20 per hour? Why not $50?” critics have asked. And the answer is simple: because those who are fighting for an increase in the minimum wage are being pragmatic, not bombastic. Wages of $10.10 (federally) and $15 (in cities with a high cost of living, like New York and Seattle) are hourly dollar amounts that raise workers above the poverty line and increase their purchasing power, while also being feasible for businesses. Research from the Policy Research and Economic Institute at the University of Massachusetts Amherst proves that these increases are absolutely possible without job loss. 5) Myth: It will cost us jobs and raise unemployment So far, there is no evidence that raising the minimum wage causes an increase in unemployment or job loss. In fact, in a Goldman Sachs analysis of the 13 states which have raised their minimum wage, found that “the states where the minimum wage went up had faster employment growth than the states where the minimum wage remained at its 2013 level.” 6) Myth: Only teenagers and uneducated people work for the minimum wage According to the Bureau of Labor Statistics, about 4.7 percent of the working population make at or below the minimum wage. While a disproportionate percentage are under the age of 25—about 35 percent, according to the Center for Economic and Policy Research—the population who would benefit from a minimum wage increase is—on average—35 years old. Eighty-eight percent are over the age of 20. 7) Myth: Seattle already has a $15 minimum wage and it’s terrible Though conservative news outlets are already looking to Seattle to see if the economy has plunged into chaos, the truth is that the minimum wage in the city has only increased by a small amount, due to the slow transition written into the law. It’s $10 for some workers, and $11 for others, depending on the size of their employer, and many small businesses are actually very happy with it. Read the full article
salon:

1) Myth: The minimum wage was never supposed to be a living wage

This is probably one of the most dangerous—and easy to debunk—myths about the minimum wage, which was championed by Franklin D. Roosevelt beginning in 1933. During an address FDR gave about one of his many economic salvation packages, he explained that “no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”

2) Myth: An increase in the minimum wage won’t help anyone if all other costs go up, too

One assumption about increasing the minimum wage is that it will force to the cost of living to increase at the same rate, and in doing so, we’d really just be speeding up inflation. This isn’t really how economics works. A 2013 study by the Chicago Fed found that increasing the minimum wage even just to $9 would increase consumer spending by $28 billion. When spending—i.e. demand—increases, manufacturers and other purveyors of goods and services can actually charge less or at least avoid increasing their prices, because they’re increasing overall revenue.

3) Myth: An increase in the minimum wage is bad for employers

Paying a higher wage to employees can also help employers cut costs in other ways, according to the Center on Budget and Policy Priorities. “Beyond simple supply and demand theory,” reads a comprehensive report on the economics of raising the minimum wage, “increasing the minimum wage may also spur businesses to operate more efficiently and employees to work harder.”

4) Myth: $15 is a random number

“Why not $20 per hour? Why not $50?” critics have asked. And the answer is simple: because those who are fighting for an increase in the minimum wage are being pragmatic, not bombastic. Wages of $10.10 (federally) and $15 (in cities with a high cost of living, like New York and Seattle) are hourly dollar amounts that raise workers above the poverty line and increase their purchasing power, while also being feasible for businesses. Research from the Policy Research and Economic Institute at the University of Massachusetts Amherst proves that these increases are absolutely possible without job loss.

5) Myth: It will cost us jobs and raise unemployment

So far, there is no evidence that raising the minimum wage causes an increase in unemployment or job loss. In fact, in a Goldman Sachs analysis of the 13 states which have raised their minimum wage, found that “the states where the minimum wage went up had faster employment growth than the states where the minimum wage remained at its 2013 level.”

6) Myth: Only teenagers and uneducated people work for the minimum wage

According to the Bureau of Labor Statistics, about 4.7 percent of the working population make at or below the minimum wage. While a disproportionate percentage are under the age of 25—about 35 percent, according to the Center for Economic and Policy Research—the population who would benefit from a minimum wage increase is—on average—35 years old. Eighty-eight percent are over the age of 20.

7) Myth: Seattle already has a $15 minimum wage and it’s terrible

Though conservative news outlets are already looking to Seattle to see if the economy has plunged into chaos, the truth is that the minimum wage in the city has only increased by a small amount, due to the slow transition written into the law. It’s $10 for some workers, and $11 for others, depending on the size of their employer, and many small businesses are actually very happy with it.

Read the full article