Busting myths about raising the minimum wage

15195939_10154964610464928_6896150308125817988_oThe following is an excerpt from RankandFile.ca’s booklet: $15 and Fairness Now! An Organizer’s Handbook for Building a Movement. The goal of the booklet is to give organizers the facts, stories and tools they need to fight for better working conditions for all. If you are interested in purchasing copies of our booklet please email editors@rankandfile.ca.

MYTH: Raising the minimum wage will cost low-wage workers their jobs.

FACT: There is resounding evidence that raising the minimum wage is not a job-killer. Economists doing cutting-edge studies have found that the typical minimum wage increase does not cause overall job loss. “Job loss is more of a threat than a theory.” For instance, the threat that robots will take our jobs has been made for over 200 years and full-time work is still 40 hours a week or more! The argument that jobs will be shipped offshore fails similarly. As much as business tries, it’s not yet possible to move a barista job halfway around the world. There are still so many jobs that require human labour.

A $15 minimum wage would pump billions of dollars into the pockets of low-wage workers and thus the Ontario economy. Jobs would be created as a result and the economic activity would more than compensate for any losses incurred by businesses that can only function on poverty wages. With the minimum wage going up, workers become more valuable to businesses and jobs generally get better. Workers get more training and there is less turnover. Businesses can put more energy into raising efficiency rather than keeping tabs on workers in poverty.

Potential job losses are not the only thing we should care about when the minimum wage goes up. Less poverty, better jobs, higher incomes for the lowest-paid — all of these would far outweigh the impact of a minimal job loss even if it was to happen.

MYTH: Raising the minimum wage will raise prices.

FACT: Don’t let the business organizations scare you: currency gyrations, oil price shocks, and many other economy-wide factors have much bigger impacts on prices than a fair minimum wage. The last few decades have seen a shrinking share of the economic pie going to wages, while the share going to profits grows. The owners of businesses, large and small, have had it very good for so long they will still have plenty left over if the minimum wage goes up. Higher minimum wages can come out of profits; they don’t have to show up in higher prices. This is achieved if wage increase come as a result of greater worker bargaining power, like that being built by the $15 and Fairness campaign.

The numbers back this up. A recent study from the University of California, Berkeley looked at what would happen if New York state raised its minimum wage to $15. It found that any price increases resulting from the higher minimum wage would be so small that it would have virtually no impact on the normal rate of inflation. Similarly, cities in the US that have already raised the minimum wage haven’t seen any of the inflationary doom and gloom spread by Bay Street.

MYTH: Raising the minimum wage will hurt small business.

FACT: The local economy benefits the most when the minimum wage goes up. When workers who were struggling to make ends meet get a raise, they immediately put their wages to work where they live. With a raise, more and better groceries are suddenly affordable, as is going out to that new restaurant around the corner or an after-school program for a child. Workers benefiting directly from a higher minimum wage are going to spend locally to improve the quality of life for them and their families. A low-wage economy doesn’t just leave workers in poverty, it also suffocates small businesses that can’t afford to cut costs when competing with major corporations. Corporations like WalMart which pay low wages and have aggressive anti-union practices have done enormous damage to small businesses in towns and cities across the country.

A higher minimum wage can produce a vibrant local economy. In Seattle, where the Fight for $15 has been successful and the first substantial wage increases have already come into effect, total wages and employment for low-wage workers went up, and the local economy has flourished.

MYTH: Economists are united in their opposition to minimum wage increases.

FACT: While the Fraser Institute continues to beat its cartoonishly business-friendly drum, many economists are speaking up for low-wage workers. Just a few years ago, over 600 US economists — including seven Nobel Prize winners — signed a letter supporting higher minimum wages, saying they wouldn’t harm the economy.

While it comes down to all the arcane statistics, you don’t need a PhD to see what has happened. Older studies, including Canadian ones that continue to be cited by business-friendly economists, have used out-dated, heavy-handed methods. They failed to isolate minimum wage increases from the bigger booms and busts that affect the economy. A new crop of studies has corrected this mistake and found no link between minimum wage hikes and job loss or economic doom. The debate is not a false one between hard-nosed economics and feel-good politics. Today’s economy is struggling to generate enough demand, and economists have said that raising the minimum wage is one good way out of the funk.

Myth: $15 minimum wage sounds good but it will never happen.

Fact: The Fight for a $15 minimum wage has already achieved numerous victories. In the United States municipalities like Washington D.C., Seattle, Sea-Tac along with states like New York and California have passed laws raising their minimum wage to $15. In Canada, Alberta has committed to raising its minimum wage to $15 an hour. In total over 17 million people in North America have seen their wages directly or indirectly positively impacted by the Fight for $15 movement.

The movement has faced major opposition from governments, large corporations and rightwing think tanks. When workers stand up together and organize they have shown they can beat the opposition and win a $15 minimum wage. There is only one inevitable fact in the fight for a $15 minimum wage: if we don’t fight, we can never win.

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