Contact: Penelope Whitney, penelopewhitney@berkeley.edu, 510-643-8756
Michael Reich, co-chair of the Center on Wage and Employment Dynamics (CWED) at UC Berkeley, will testify at the first House of Representatives hearing Feb. 7 to raise the federal minimum wage. The bill, HR 582, proposes to increase the federal minimum wage in six steps, from its current $7.25 level to $15 by 2024. It would gradually eliminate, by 2027, the subminimum wage for tipped workers, which has stood at $2.13 since 1991, and it would eliminate as well as the subminimum wages for youth and for workers with disabilities.
His expert testimony on the employment effects is based upon numerous CWED studies on the subject over the past decade. These include a 2018 study showing that high local minimum wages have had their desired effect–raising incomes of low-wage workers without detectable employment losses.
“The latest studies indicate that a federal minimum wage of $15 is achievable, even in low-wage states such as Mississippi,” said Michael Reich. “We expect the public discussion of this proposal to be become a central issue in the 2020 electoral cycle.” The full testimony, Likely Effects of a $15 Federal Minimum Wage by 2024, will be available February 7 at 10am PST.
His testimony includes these five important takeaways:
- The proposed gradual increase from $7.25 to $15 is well within the realm of previous experience. In 2019, we have data on the impact of increases, including states that have reached $12 per hour and cities that have already reached $15 per hour. The examples also include percentage increases that are comparable to or exceed those in HR 582.
- The impacts of these increases have been overwhelmingly positive. The newest studies indicate that the Act will have minimal to no adverse effects on employment, and that they will have substantial positive effects on the lowest-wages areas of the United States.
- Moreover, these new studies include all low-wage jobs. We do not have to guess, as Congressional Budget Office (CBO) did in 2014, how this will impact adult workers.
- The 21 states without their own minimum wage laws will see the biggest gains, with significant increases in local purchasing power. Small price increases in low-wage non-tradeables are easily absorbed in those states. And these states have already lost much of their low-wage manufacturing, such as apparel, textiles and furniture, while gaining auto and aircraft assembly plants.
- Recently, economists have begun to look at minimum wage effects on child and adult health and education. These effects are beneficial, large and important in themselves. They would also improve labor force participation and productivity levels in the poorest states.
Related studies from Michael Reich and CWED:
The New Wave of Local Minimum Wage Policies: Evidence from Six Cities
Are Local Minimum Wages Absorbed by Price Increases?
Credible Research Designs for Minimum Wage Studies
The Center on Wage and Employment Dynamics (CWED) is a project of the Institute for Research on Labor and Employment (IRLE) at UC Berkeley. IRLE connects world-class research with policy to improve workers’ lives, communities, and society.