Beyond SeaTac: Movement on the Minimum Wage?

Beyond SeaTac: Movement on the Minimum Wage?

The past couple of weeks have offered glimmers of hope on the minimum wage front. Successful ballot measures in New Jersey and SeaTac, Washington (the Seattle suburb surrounding the airport) marked the latest efforts of state and local governments to push local minimums above the federal floor of $7.25 an hour. And, in the wake of the election, the President threw his support behind Tom Harkin’s Fair Minimum Wage Act—which would raise the federal minimum to $10.10 but has languished on the Senate calendar for nine months. Opponents, just as quickly, have dusted off the usual suspects and hit the airwaves and op-ed pages with tired claims that a $10 minimum would be a radical and intrusive departure, that it would slow growth and kill jobs, and that it would hurt the very workers it claims to help.

Let’s look at this more closely. By any reasonable measure, of course, there is nothing particularly dramatic or game-changing about a $10 minimum wage. In inflation-adjusted dollars, this still falls short of just returning the minimum wage to its level of a generation ago. More to the point, as John Schmitt has shown (here and here), a minimum wage indexed to a more meaningful benchmark—like productivity or the median wage—would fall closer to the $15 to $20 range.

The workers that would benefit from an increase, in turn, scarcely resemble the suburban teenage hamburger-flippers so often invoked by conservatives. The graphic below summarizes the distribution (across various measures) of hourly workers and of hourly workers paid at or below the minimum wage in 2012. Toggling between the two universes of workers underscores those demographics, occupations, and industries in which low-wage workers are overrepresented.

Unsurprisingly, a higher share of minimum wage workers are young—a fact reflected in the age and marital distributions. But over three-quarters of those working at or below the minimum are not teenagers. Indeed, recent work by David Cooper and Doug Hall underscores that almost 90 percent of those who would benefit from an increase (a group that includes those working below, at, or near the minimum) are at least twenty years old. Almost 45 percent of minimum or sub-minimum wage workers have better than a high school education. And about 42 percent work more than thirty hours a week. African-Americans, Latinos, and women are all disproportionately represented in the minimum wage workforce.

But perhaps the starkest gaps are those revealed by industry and occupation. The leisure and hospitality industry accounts for just 13 percent of hourly employment but over half of all minimum wage employment. Food preparation and service account for less than 10 percent of hourly employment, but nearly 44 percent of workers earning at or below the minimum. This is why the fast food industry (in which low-wage, no-benefit, part-time employment is not just a pattern but a business model) has drawn such close scrutiny recently. This includes the rolling strikes that began last summer and a devastating new report from the UC Berkeley Labor Center which finds that more than half of the families of front-line fast-food workers depend upon public social programs (twice the rate for the workforce as a whole), at a cost to taxpayers of nearly $7 billion annually.

Finally, the benefits of raising the minimum clearly outweigh any costs. In an exhaustive survey of the economics literature on this question, John Schmitt establishes pretty convincingly that the negative employment effects (layoffs or slower hiring in response to an increase) are either negligible or so small as to be undetectable, and that the adjustments made by workers and firms—including reductions in turnover, improvements in productivity, or wage compression—are mostly good things.

Colin Gordon is a professor of history at the University of Iowa.