Connecting state and local government leaders
“I think there definitely is momentum,” says one expert.
Maryland has become the third state this year, after New Jersey and Illinois, to enact a phased-in minimum wage increase to $15 per hour—a sign of the increased traction that the policy is getting around the country, at least among Democratic-leaning states.
California, Massachusetts, New York, and Washington, D.C., have previously adopted similar wage hikes. The rise of state laws gradually upping the hourly pay floor to $15 has unfolded since Seattle became the first major U.S. city to move ahead with the mandate in 2014.
At least 24 states have altered their minimum wage laws to some degree since the start of that year, according to Economic Policy Institute, a left-leaning think tank. The group also says 41 localities have adopted minimum wages above levels for their respective states.
“I think there definitely is momentum,” said David Cooper, a senior analyst with the institute. “Fifteen has kind of become that benchmark now of where folks are aiming.”
“Anything less than that at this point looks like weak tea,” he added.
At the federal level, the minimum wage remains $7.25 an hour and has not been raised since 2009. Earlier this month, a bill that would raise the federal minimum wage to $15 by 2024 cleared a congressional committee on a party-line vote in the Democratic-held House.
The bill has 204 co-sponsors, all of them Democrats, and as written is a long shot at best in the Republican-controlled Senate.
Debate continues about whether raising the wage to $15 an hour is a job-killer and hurts small businesses, or a needed economic boost for people at the bottom of the income ladder.
Maryland’s General Assembly on Thursday overrode a veto by Gov. Larry Hogan, a Republican, of the minimum wage legislation there. Hogan’s position was that the increase would cost Maryland jobs, make it less competitive with other states, and “devastate” its economy.
“Making Maryland’s minimum wage more than double that of Virginia could be too much for our economy to bear,” his veto letter says.
Hogan noted that during his time as governor the state’s minimum wage had increased by nearly 40 percent, to $10.10.
The governor also said he put forward alternative proposals that were ignored.
Some of these included raising the wage to $12.10 by 2022, adopting triggers to raise the wage above that mark based on minimum wage levels in surrounding states, and differentiating the wage across regions in the state to account for local economic conditions.
Legislators settled on a proposal that ramps up the wage to $11 an hour in 2020 and then up to $15 an hour by 2025 for companies with at least 15 people. For smaller firms, the increase is phased in more slowly and tops out at $15 in 2026.
These changes don’t apply for tipped employees, like restaurant servers and bartenders.
Cooper acknowledges that the $15 an hour figure itself—as opposed to say $13 or $18 an hour—may be as much a product of politics as economic theory.
But he also says it’s in the ballpark of where the wage would be if it had grown at the rate of average wages in the U.S. economy in past decades—this would yield a minimum wage of about $12 an hour. If it had risen at the pace of productivity growth it would be around $20.
Historically, Cooper points out, the federal minimum wage hit its highest point after factoring in inflation in 1968, when it would have been around $10.15 in today’s dollars.
“You can make a really strong case that you’re going to need $15 an hour, as a full-time worker, to kind of afford your basic needs pretty much anywhere in the country in the next few years,” he said.
“It may have been a politically expedient number to choose, but one that makes a lot of sense.”
There are other experts who see things differently.
Michael Strain, director of economic policy studies with the conservative-leaning American Enterprise Institute, told U.S. House lawmakers last month that increasing the federal minimum wage to $15 over a six year timespan would “likely have a significant and negative effect on employment.”
The brunt of this effect would be felt by workers with fewer skills, and less experience, he said, according to a written copy of his testimony. “A $15 per hour federal minimum wage is a large and risky gamble, and is outside our evidence base,” Strain said.
“It is such a high minimum wage relative to the existing distribution of wage rates,” he added.
After recognizing that the effect of minimum wage increases is an active area of research with studies reaching different conclusions, Strain says that in his research he’d found evidence that employment decreases when minimum wage rates are increased.
Cooper, on the other hand, says some studies show a slight negative effect on job growth from minimum wage hikes, while others have found small positive effects. A fair reading of this work, he says, is that the effect on jobs is so small it’s hard for economists to measure.
At the same time, he adds, there’s other research that shows raising the pay floor increases incomes, reduces poverty, and results in higher earnings for low-wage workers.
In early March, a committee in the Connecticut state legislature held a hearing on the possibility of raising the state’s minimum wage to $15 an hour. State Rep. David Rutigliano, a Republican and a businessman, voiced skepticism about research findings Cooper presented.
“I have a desk full of studies suggesting the opposite,” Rutigliano told The Hartford Courant, adding that in the current economy, “wages are rising naturally.”
It looks unlikely that debate about the $15 minimum wage will disappear from state capitals in the coming months and years.
Connecticut, according to information compiled by the consulting and lobbying firm MultiState Associates, is one of about two dozen states where lawmakers have introduced $15 an hour minimum wage legislation in this year’s state legislative sessions.
Bill Lucia is a Senior Reporter for Route Fifty and is based in Olympia, Washington.