Looking beyond employment effects of higher minimum wage: loss of non-monetary benefits, increased workload, heavier payroll taxes

Mark Perry, a scholar at the American Enterprise Institute, effectively counters claims that a higher minimum wage has minimal impacts on employment.

I’ve argued before on CD that saying (or finding empirically) that minimum wage increases have no or very small effects on employment levels is not the same as saying that minimum wage increases have no negative effects on low-skilled and unskilled workers.  Reason? Even if employers maintain the same staffing levels of low-skilled and unskilled workers following a large increase in the minimum wage (e.g. 40% from $7.25 to $10.10 per hour) as before, many businesses will make adjustments to a variety of non-monetary factors to compensate for the higher, government-mandated monetary wage. Those adjustments might include reducing hours, fringe benefits and on-the-job training, and increasing expectations of work productivity (fewer workers or fewer hours to the same or more work). On net, those non-monetary adjustments could mean that many workers who keep their jobs (or find a job) won’t necessarily be any better off following a minimum wage hike, and could even be worse off.

Previously Perry linked to research maintaining that some minimum wage workers would effectively experience a 50 percent tax rate if the federal government lifted the wage from $7.25 to $10.10.

Nonetheless, Stateline reports that state and local efforts to boost the wage continue across the country.

So far this year, 34 states have or are now considering increases to their minimum wage, according to the National Conference of State Legislatures’ database. Measures are still advancing in Hawaii, Illinois, Massachusetts and Vermont.

…Some 120 cities have enacted “living wages” that set a minimum standard for businesses that receive city contracts. City minimums range from $9 to $16 an hour.

And, as we know, SeaTac passed a targeted $15 living wage ordinance last November and Seattle is headed toward a wage hike this fall. But for audacity, you have to go to the city by the bay.

…San Francisco’s 9,475-member Service Employees International Union local has been leading the campaign for a more livable city. Now it’s putting its members’ own economic agenda front and center at City Hall.

The SEIU’s proposed new contract with the city includes calls for:

— A 15 percent raise over the next three years.

— A $21-an-hour minimum wage for all city workers.

On the other hand, Arizona just barred cities and counties from setting minimum wage standards.