The federal mark for minimum wage in the United States is $7.25 and has been for almost ten years. In many states, minimum wage is above the federal mark, and some cities such as San Francisco and Seattle minimum wage is being increased to $15 per hour. The two being among the first major cities to go through with this policy. Throughout the United States, many have now taken up new policies and have increased their minimum wage to between $12 and $15.
To be exact there are now seven states, ten big cities, and a lot of smaller localities switching to these new policies. Even as these policies continue to sweep throughout the United States, and companies are compelled to raise their employees’ pay, there are concerns that employment rates will fall. However, the Berkeley’s Centre at the University of California on Thursday released a report on Wage and Employment Dynamics (CWED). The report illustrated that at city level there doesn’t show any sign of employment rates dropping.
Researchers looked at Oakland, San Jose, Chicago, Seattle, Washington, San Francisco, who were the first six large cities to raise their minimum wage above the federal mark to $10 per hour. They specifically dived into the study of the United States Bureau of Labour Statistics data on the food service industries, a division of which the researcher authors say is made up of for the most part of minimum-wage employees. The researchers looked at these cities from 2012, before minimum wages surpassed $10, and again in 2016. The idea was to see if employees’ wages were in actual fact increasing, and if the policies were causing people to lose their jobs.
A labour economist, co-author of the report, and co-chair of CWED, Sylvia Allegretto, tells U.S. News agencies that: “Overall, we find that (the policies are) working as intended. Thus far, they’re raising the earnings of low-wage workers without causing disruption in the labour market.” Also saying that “We haven’t seen any significant employment losses due to these minimum wage policies, but we do see positive and statistically significantly earnings effects”. Sylvia Allegretto additionally states that she was not taken aback by the discoveries the researchers found, since they are very similar to other research on minimum wage. However, the results do differentiate from those of a University of Washington study from 2017, which show that there was some harm to employment in Seattle when minimum wage was raised.
Allegretto states that it’s difficult to grasp how minimum wage raises do not inevitably result in job losses. Nevertheless, the monetary expense of rising employee salaries is cushioned by factors, such as the money saved from less employee’s leaving their job. If workers are happier with their wages they are more likely to stay in their positions longer. meaning that businesses will not have to spend as much money training new hires. Now that several cities are now moving to $15 per hour, Allegretto also says The Berkeley’s Centre researchers’ next steps will be to carry out another study to show the effects of raised minimum wages