Minimum Wage Goes Up In 18 States On New Year's Day
AILSA CHANG, HOST:
People who earn the minimum wage in 18 states are getting a raise today. Those raises range from just 4 cents in Alaska to a full dollar in Maine. Sounds like good news for some workers. But, actually, not everybody is convinced. Joining me now to talk about all this is NPR's Joel Rose. Hey, Joel.
JOEL ROSE, BYLINE: Hey, Ailsa.
CHANG: All right. First of all, which states are we talking about? We mentioned Maine and Alaska. What are some of the others?
ROSE: Yeah, they're really all over the map. The federal minimum wage has been $7.25, and it's been the same since 2009. So states and cities across the country are really taking matters into their own hands. You've already mentioned Maine. They've got the biggest jump this year. They're going up a dollar to $10 an hour. Some of the other big jumps we're going to see are in Colorado and Hawaii. There are a lot of states that are going to see smaller increases. New York and California are on that list. Both of those states are on their way up to $15 an hour over the next couple of years.
CHANG: And what's up with the four cents in Alaska? Does that even count as a raise?
ROSE: Well, technically, yes. The minimum wage is pegged to inflation in Alaska, as it is in many states. So you know, this year it's going up four cents. But I guess every little bit counts.
CHANG: OK. Well, many cities have already hiked up the minimum wage, in some cases by several dollars. What's been the effect there?
ROSE: That is really in dispute. There are a lot of studies that have shown little to no effect on hiring. But there was a really big, provocative study that came out this year about Seattle, which - the city of Seattle has gradually been raising its minimum wage all the way up to $13 an hour. And this study from the University of Washington found that wages did go up, but overall, the average low-income worker actually lost money because businesses cut payrolls. They reduced hours. Michael Saltsman is with the Employment Policies Institute, which is opposed to these big hikes in the minimum wage. And he was very eager to talk about this Seattle study.
MICHAEL SALTSMAN: Yeah, people were seeing increases in their hourly pay. But on average, they lost enough hours at work that they were earning $125 less a month. For me, that's kind of, like, the clearest picture of a scenario you want to avoid.
CHANG: Well, Saltsman's group is opposed to big hikes, as you said. So this is a really contentious issue. What do other groups say about this?
ROSE: Other economists have looked at Seattle and other cities, and they've come to very different conclusions. Michael Reich studies wages and employment at UC Berkeley. He thinks that Seattle study is flawed. He's run the numbers on minimum wage hikes in a bunch of cities - in Chicago, San Francisco, Oakland, San Jose, Seattle, Washington, D.C. - and he's got a big paper on this that he's going to present this week. And he says that, so far, these minimum wage hikes have little to no effect on hiring.
MICHAEL REICH: If any city did find big negative employment effects, then it should be visible at the street level. That is you should see closures. You would see workers protesting and so forth.
ROSE: Reich says that all economists agree basically, at some point, raising the minimum wage will have an impact on hiring. But he says you just haven't seen that yet in Seattle or any of these other cities.
CHANG: And which employers say they will be the most affected by these wage hikes?
ROSE: The restaurant industry is one that has complained especially loudly. There was a study about restaurants in Oakland, Calif., that showed a higher minimum wage might make some restaurants more likely to go out of business. But that seemed only to apply in cases of restaurants that were sort of struggling anyway. You don't see that effect with stronger, more successful restaurants. So I think the data on that are mixed.
CHANG: NPR's Joel Rose in New York, thank you.
ROSE: You're welcome. Transcript provided by NPR, Copyright NPR.