How high is too high for a minimum wage? [View all]
By Justin Fox / Bloomberg Opinion ·
Among the 10 ballot proposals that Californians will vote on next week is one that would raise the state’s minimum hourly wage at employers with more than 25 employees to $17 immediately — which would be the highest state minimum in the U.S. — and $18 in January, with annual inflation adjustments after that. The minimum wage for smaller employers would rise to $17 in January and $18 in 2026. (Washington state has the current highest minimum wage at $16.28 per hour, increasing to $16.66 as of Jan. 1, 2025.)
This would not constitute what you could call a radical change for California, whose minimum wage is already $16 an hour with annual cost-of-living increases, and many coastal communities have higher minimums. What’s more, the state added a $20 minimum wage for fast-food chains with more than 60 outlets that don’t happen to be Panera Bread in April and imposed a $23 minimum wage on very large health-care employers on Oct. 16. Though support for Proposition 32 appears to be fading, meaning some of the calculations below could prove academic, it still seems timely to explore the possible consequences of the state’s minimum wage campaign of the past decade or so.
A quarter century ago, the consensus among economists was that raising minimum wages destroyed jobs as employers figured out ways to do without suddenly more-expensive workers. Since then, a flood of empirical studies — summed up nicely in the forthcoming Handbook of Labor Economics by Arindrajit Dube of the University of Massachusetts Amherst and Attila S. Lindner of University College London — have shown job losses after most minimum-wage increases to be modest to nonexistent and the benefits for lower-income workers great. Minimum wage increases seem to represent, according to this new consensus, the supposedly nonexistent free lunch.
Even the enthusiasts among economists still believe, though, that at some level of minimum wage the lunch starts to get expensive. How high is too high? It’s a good question, and it hasn’t really been answered. Future research, Dube and Lindner wrote near the end of their review, “should focus on determining the appropriate levels of the minimum wage, rather than debating the existence of the policy itself.”
https://www.heraldnet.com/opinion/comment-how-high-is-too-high-for-a-minimum-wage/
How high is too high for executive compensation? You never hear that question. Yet many make an excessive wage while doing little for the company they run.
Minimum wage should be a livable wage. It's that simple.
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