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Mandating a $15 Minimum Wage: Bad for Workers, Bad for Businesses, Bad for the Economy

In a hearing that lasted all day, Committee Democrats tried desperately to convince themselves that a far-left socialist proposal to arbitrarily hike the minimum wage by 107 percent could go mainstream. It didn’t work. In a fascinating case study in denial, Committee Democrats made three claims: that more than doubling the current minimum wage to $15 an hour will be good for workers, good for businesses, and good for the economy.

Workers, small business owners, economists, and Committee Republicans are all here to tell you that these claims couldn’t be further from the truth.

“Liberal activists are trying to sell a radical minimum wage hike as a benefit to working class Americans. They claim that it will redistribute wealth and provide poor Americans with a ‘living wage.’  This is an empty promise the likes of which we have not heard since the famous healthcare sales job of 2009: ‘if you like the plan you have, you can keep it,’” Republican Leader Virginia Foxx said in her opening statement. “Raising the federal minimum wage to $15 will not help anyone make ends meet. It will redistribute poverty, eliminate jobs, and deeply harm American workers, businesses, and the U.S. economy at large.”

Dr. Michael Strain of the American Enterprise Institute testified that if the minimum wage is arbitrarily hiked more than 100 percent, then job losses would be most heavily concentrated “among workers with relatively fewer skills and workers with relatively less labor market experience (e.g., young workers).”

In addition to workers in entry-level jobs, workers with few education credentials, and workers under the age of 25, tipped employees (like restaurant servers) would bear some of the most devastating consequences of this federal mandate.

Ms. Simone Barron, a restaurant worker from Seattle, Washington (where the minimum wage has already been raised to $15 per hour), testified that after the City of Seattle raised the minimum wage, her employer moved from a standard tip line to a service charge model which has resulted in Barron seeing less of her take home pay.

“I used to work 4 shifts a week and made enough money to raise a son, pay my rent, go to school and be a part of a vibrant arts community. With the cost of living skyrocketing and the impact of the minimum wage increase on my income, I had to get a second job and work 6 days a week. I couldn’t sustain that pace. Now, I worry every month about paying my rent. This is a worry I have never had until the minimum wage increase impacted my job,” Barron told members.

Dr. Douglas Holtz-Eakin of the American Action Forum cautioned members that such a radical departure from the status quo has never happened at the federal level, and as such, “a minimum wage increase this large (over 100 percent) poses a major disruption to the U.S. labor market. Unfortunately, the low-wage workers the policy is intended to help would be the very ones who would most suffer these consequences.”

Following the City of Seattle’s implementation of a $15 an hour minimum wage, the University of Washington conducted a study that found that rather than providing Seattle employees are actually incurring a net loss of $125 from their average month earnings because their hours had been cut so dramatically to offset the wage hike.

“When combining the lost work hours with the 10,000 lost jobs, the 2017 UW study concluded that Seattle’s $15 minimum wage law reduced total income paid to the city’s low-wage workers by $120 million per year,” Holtz-Eakin said.

Small businesses will also suffer if this far-left policy is implemented. Many job creators will have to weigh making staff cuts against going out of business, and a study from the National Federation of Independent Business found that raising the minimum wage to $15 an hour would result in a $2 trillion reduction in real economic output, a $980 billion reduction in real GDP, and a $103 billion reduction in personal disposable income.

This proposal from Committee Democrats is deeply irresponsible as well as deeply dishonest. Workers, businesses, and the U.S. economy would suffer as a direct result of this drastic mandate, and Committee Republicans will continue to fight for solutions that put American workers and job creators first.

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