Public Assets Institute > Blog > The case gets stronger for $15 an hour

The case gets stronger for $15 an hour

There may be a silver lining to the Legislature’s failure last session to reach agreement on raising Vermont’s minimum wage to $15 an hour. New research published in recent months highlights the benefits of a higher minimum wage, questions the putative negative effects, and strengthens the case for Vermont to act sooner rather than later.

A recent story in the Washington Post summarized much of the new research. It cites a new study in the Quarterly Journal of Economics that challenges the conventional wisdom that going to $15 an hour will hurt the people it is designed to help by destroying low-wage jobs. That study was complemented by researchers at Berkeley, who looked at low-wage areas within states and also found no adverse effects on employment.

The studies above looked at state-level changes, including in states that have adopted $15-an-hour minimum-wage laws. A report released this month by Congressional Budget Office analyzed the effects of a $15-an-hour federal minimum wage, to be phased in by 2025. Although the overall benefits were positive, Congressional Budget Office said that the increase would cause the loss of more than a million jobs. But the job-loss prediction has been challenged by economists who said the CBO did not take the new research into account.

As we might expect, consumer spending increases when minimum wage workers have more money in their pockets, which gives the economy a boost. Beyond the economic benefits, raising the minimum wage to $15 an hour has broader social benefits, too, according to new research cited in the Washington Post article. Raising the minimum wage—and the Earned Income Tax Credit—has been shown to reduce recidivism. It reduces poverty and contributes to increased productivity among workers.

In Vermont, the question around a $15 minimum wage is when, not if. During the last legislative session, the momentum appeared to be shifting toward the proponents of delay—those who seem to agree that Vermonters deserve a $15 minimum wage, but not until the second half of the next decade.

That’s too long to wait for people who are working hard and still can’t support their families. Fortunately, advocates for quicker action can go into the 2020 session armed with research showing that Vermont—along with low-wage Vermonters—will be better off when everybody can earn at least $15 an hour.

Posted by Jack Hoffman on July 24, 2019 at 10:27 am

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