What do you think? Leave a respectful comment.

How a minimum wage increase could impact people’s livelihoods

More than 17 million Americans could see their income rise if the $15 minimum wage now in the COVID relief bill passes Congress. We hear from some of those who would be impacted by a minimum wage increase, and Stephanie Sy speaks with two economists with different perspectives on the topic.

Read the Full Transcript

  • Judy Woodruff:

    More than 17 million Americans could see their income rise if the $15-an-hour minimum wage in the COVID relief bill now passes Congress. For workers and for employers, there's a lot at stake.

    Let's hear now from some of them. And then Stephanie Sy will look more closely at the debate behind it.

  • Donora Gordon:

    Hi. My name is Donora Gordon. I am a food service worker and have been for more than 30 years. And I am in favor of raising the minimum wage.

  • Nya Marshall:

    My name is Nya Marshall. I own a restaurant located in the city of Detroit.

  • Cristian Cardona:

    My name is Cristian Cardona. I am a McDonald's worker here in Orlando, Florida.

  • Carrie Burkett:

    My name is Carrie Burkett. I own JamesC Boutique in Lexington, Kentucky.

  • Latonya Jones-Costa:

    Hello, my name is LaTonya Jones-Costa, I am a home care worker. I have been in the home care field for over 23 years.

    And at the present time, I make $10 an hour. To be a housekeeper, a confidant, a medical manager, prescription filler, a chauffeur, I do all this for my clients. And I make $10 an hour. I asked my daughter today how me being in this field has impacted her. She doesn't get to see me a lot, because I'm working so much.

    She sees me struggling to make sure the bills are paid, to make sure that we have food. And that's a hard thing to hear from your child

  • Carrie Burkett:

    Our workers are all college age. So the minimum wage increase sounds great to all the college girls. And for the business owners. I think it's a little different.

    You just start to think, like, can I even afford to have the girls that I have on a schedule? If I want to keep all of them, because, of course, I would want to I'm going to have to cut their hours. I would try to keep all my employees, but it would be very hard. Eventually, something would have to give.

  • Cristian Cardona:

    Ten years ago, my father and my sister and I came to this country. We came here seeking better opportunities.

    We believed in the American dream. But the reality has been that even people who work really hard in this country can still live paycheck to paycheck. We all make less than $12 an hour.

    Raising the minimum wage to a living wage would mean, for me, that I would be able to afford to go to school and seek higher education to go for a job that I love, do something that I care about.

  • Nya Marshall:

    I don't think that wages should be increased during a pandemic, because most businesses are barely making it. As it stands right now, I'm barely keeping my doors open week by week; 48 percent of Black businesses have closed as of right now. Adding a wage hike right now would increase a huge number of closures for businesses overall.

    What that means is, my employees would be on unemployment. That's what we already have, a labor shortage as it stands right now.

  • Donora Gordon:

    Right now, the job I'm working, as a 55-year-old with carpal tunnel and a herniated disc, is rolling silverware in a restaurant. I have worked every day of this pandemic. And to say the least, at my age, it's been stressful.

    Raising the minimum wage, the effect on my life would be substantial. At this point in my life, I'm stockpiling everything I can in my Social Security. I need to be able to hopefully not retire in absolute poverty.

    Many Americans feel completely lost in this society of work, work, work until you die. There's just — there must be more to the American dream than that.

  • Stephanie Sy:

    Raising the minimum wage will have both positive and negative effects on the economy.

    The question is, on net, will it be good for the country?

    And we're joined by two economists with different perspectives on that question.

    Michael strain is the director of economic policy studies at the American Enterprise Institute in Washington. And Arin Dube is a professor at the University of Massachusetts Amherst.

    Gentlemen, thank you both for being on the "NewsHour."

    Michael Strain, I want to start with you.

    We just heard from workers who have been on the front line fighting the pandemic, some of whom are making $10 an hour. Given all the inequities that have been laid bare in the last year of this pandemic, is now the time to raise the federal minimum wage to $15 an hour?

  • Michael Strain:

    Well, I think the economy does have inequities. And those should be addressed by public policy.

    Nobody disagrees with that. Or at least I don't disagree with it. The question is, just what is the best tool to use in order to address those inequities?

    And I do not think that minimum wage particularly a $15 an hour minimum wage is the best tool. The Congressional Budget Office, nonpartisan kind of scorekeeper/referee in policy debates, finds that the $15-an-hour minimum wage will reduce employment opportunities by over one million jobs.

    Who's not going to be getting jobs? It's not going to be college graduates. It's not going to be workers who have higher skills, but who didn't graduate college. It's going to be the least skilled, least experienced, most vulnerable workers in society who are going to bear the downside, who are going to bear the costs of that policy.

    I would look to a different policy. I would look to federal earnings subsidies, the Earned Income Tax Credit, programs like that can be used to help make work pay, that can be used to pull people out of poverty, but that wouldn't have the effect of eliminating over a million job opportunities.

  • Stephanie Sy:

    You mentioned the CBO's most recent analysis. So I want to talk about those numbers before we get to Mr. Dube.

    They say that with a $15 minimum wage hike, it's projected that 900,000 people could be lifted out of poverty; 27 million people would get a raise. And, Michael Strain, as you say 1.4 million jobs would be lost.

    With that in mind, Arin Dube, given all the job losses we have already seen during this pandemic, is now the time for more, even if it means that hundreds of thousands of people will be lifted out of poverty?

  • Arin Dube:

    So, first of all, I think it's important to understand that we have not raised the federal minimum wage for almost a dozen years. That's actually the longest that we have not raised the minimum wage since we have had the minimum wage in 1938.

    So, I think it's certainly the right time to talk about raising the minimum wage. And, look, we are not really talking about raising a very substantial raise in the minimum wage during the pandemic. We're talking about phasing in over a number of years.

    So, I want to think about where we would be five years from now without a minimum wage, I think we would be in a place where low-wage jobs are — low-wage workers are going to struggle even more.

    So, let's look at the CBO numbers. So, CBO number says 27 million people are going to get a raise from this policy. And they argue that 1.4 million fewer jobs will be there as a result.

    Now, overall, even if you take the CBO numbers seriously, that means working people as a whole come out far ahead, because the wage gains are substantially greater than any job losses. And, as a result, nearly a million people are pulled out of poverty.

    I happen to think that those estimates on job losses that the CBO put out are too pessimistic. I have laid out in great detail why I actually think that those estimates tend to really put more weight on some of the most negative studies that actually have been done to date, which actually have been shown to have a lot of problems.

  • Stephanie Sy:

    That gets to another question I have, which is the number, $15 an hour, which is a lot compared to what was proposed when, for example, President Obama was president and he proposed $10 an hour.

    Michael Strain, I want to ask you about that. There are places, for example, in the South, where folks are still earning that federal minimum wage that has not been changed for a decade, just over $7.65 an hour.

    Isn't it time to look at some type of raise? And can you see how that might minimize job losses, and yet lift at least a few hundreds of thousands of people out of poverty, which is what the CBO estimate was for $10 an hour?

  • Michael Strain:

    Going to $15 would really have a significant impact on the labor markets of many of these states.

    There are three states where half of all workers earn less than $16.50. There are 20 states where half of all workers earn less than $18 an hour. So, that really should tell you just how high a $15-an-hour minimum wage is.

    You're talking about a wage that would directly affect a huge share of workers in many states, in over a dozen states. And the effects of that, in my mind, pretty clearly point to job losses. You're right that a lot of those states currently have a $7.25 per hour bit of a wage, so you would be more than doubling the minimum in those states.

    And, again, those states are particularly low-wage. I think Arin is right to point to the tradeoff. You're going to have jobs that are lost. At the same time, you're going to have households with higher income, because most households are going to keep their jobs, and those that are affected by the minimum wage are going to get a raise.

    So, the question is just, is that tradeoff worth it? And I think the answer is no.

  • Stephanie Sy:

    Arin Dube, what is your response to some of Michael Strain's alternatives to raising the minimum wage? And, also, what do you say to people that say, why not just continue to leave this up to cities and states, based on the cost of living in their locales?

  • Arin Dube:

    In terms of regional variation, in practice, we actually do have regional variation, because especially higher-wage blue states tend to have higher state minimum wages. And so we actually do accomplish that by allowing states and increasingly cities to having higher minimums.

    At the same time, there are around almost — or maybe around 21 states that currently have not had a federal increase or any other increase for nearly a dozen years. So, I think we do need a federal floor to ensure that low-wage workers everywhere our reach, be it Alabama or be it Massachusetts.

  • Stephanie Sy:

    We will have to leave it there.

    Arin Dube with the University of Massachusetts at Amherst and Michael Strain with the American Enterprise Institute joining us from Washington, thank you both.

  • Arin Dube:

    Thanks for having us.

Listen to this Segment