A Look at How a Hike in Minimum Wage Affects Workers

It should come as a surprise to nobody that anyone working for minimum wage in Los Angeles would likely welcome an increase in the city’s minimum wage or an increase in the state minimum wage to a rate above what the city currently mandates.

visions-from-im-5-64561-mHowever, as one might also expect, many employers and business associations are against a hike in the local or statewide minimum wage rates, arguing that increasing the minimum wage would harm workers. While it is obvious they are more concerned about their own profitability that their employees’ well-being, according to a recent news article from the Los Angeles Times, some economists don’t know what effect a raise would have on workers.

First, it should be noted, as our Los Angeles employment wage dispute lawyers understand, we are talking national trends and employment rates, not the effect on individual employees, for the most part, as employers would like it to appear.

A research institution trying to make sense of this issue conducted a series of polls of roughly 50 nationally recognized economists. They survey asked economists if increasing the national minimum wage to $15 over the next five years would negatively affect employment rates of minimum wage earners. This was done in the typical survey style, in which they were asked how strongly they agree with a statement and the most common answer was they were uncertain what effect it would have on low-wage workers across the county.

Specifically, 38 percent of economists surveyed said they were uncertain. On the other hand, 26 percent of economists surveyed said it would have a negative effect on employment rates of minimum wage earners, and the remaining respondents said they did not believe it would have a negative effect. Essentially, the two groups canceled each other out, and the largest group of respondents was uncertain, which basically established uncertainty as the only result of this survey.

What seems certain is that employers and trade associations are against raising the minimum wage, with claims that doing so will harm employment rates of low wage workers. But hey are not basing their claims on any significant source of evidence, and are likely basing claims on a desire to pay their workers less money.

What else is interesting, as discussed in the article, is that the issue of raising the minimum wage and what effect, if any, it will have on the local and national employment rate is not some obscure issue rarely examined. It seems that this issue is one of the most common issues studied by economists, and it has been for decades. After decades of in-depth study, as the survey results demonstrate, there is no evidence raising the minimum wage will have any effect on hiring rates. This makes sense, because people generally hire based upon their needs and what sales will support. In addition to this, since many minimum wage workers are employed in retail and service sectors, an increase in employee income is often put right back in the same industries, as the employees have more money to spend.

Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 714-937-2020.

Additional Resources:

Does a minimum wage raise hurt workers? Economists say: We don’t know, September 23, 2015, Los Angeles Times, by Michael Hiltzik

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