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What Do Minimum Wage Hikes Really Do To Jobs?

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States like California and New York have raised the minimum wage to $15 an hour. So, what does that mean for job creators?

The government raises the entry-level wage to increase the minimum amount employers must pay their hourly employees. When governments raise the cost of hiring new employees, employers have to reduce opportunities or raise prices for customers. In many cases this means that business owners will hire fewer employees, or cut hours for employees because they can no longer afford to pay them.

In California, for example, higher entry-level wages could cost the state almost 700,000 jobs. New York is no different. The state’s entry-level wage could reduce employment by as many as 588,800 jobs.

And what about a $15 entry-level wage nationwide?

One model estimated it could mean 16.8 million fewer jobs. One result of these wage hikes is automation. That is employers relying on self-service kiosks instead of actual employees. This is often a cheaper alternative to paying employees much higher entry-level wages.

Another option is raising prices, but this is unpopular for customers who don’t want to pay more money for the same goods and services.

So how can the government help employees without hurting employers? One way is to focus on helping job seekers find good-paying career opportunities. Research shows there will be about 2.5 million middle-skill job openings next year.

For example, there are currently 100,000 automotive technician openings in the labor market, which boasts an average industry salary of $46,000. And roughly 1.6 million openings for registered nurses, which pay a median of $70,000.

Smart government policy would match job seekers to these $50,000/year and more opportunities, not prevent them from entering the labor force at all. While the fight for 15 raises the wage floor, we should really be talking about the Fight for 50, which raises the ceiling for those wanting a middle-class income and a career.

For more information about the Fight for 50. Visit InformationStation.org.

Want information on how government regulations affect your pocketbook? Then download the InformationStation App, available on iPhone and Android.

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