Sustainable economies are built on good jobs. If people don’t earn enough money, they can’t keep the economy growing by buying goods and services.
This basic fact is lost on opponents of minimum-wage increases, who for decades have been arguing that these pay hikes hurt businesses, cause job loss and therefore are bad for the economy.
Repetition of an argument might keep it in the news, but it doesn’t make it factually credible. So it is with minimum-wage rejectionists, who have succeeded in getting at least equal time for their assertions with every proposed wage increase, even though their claims have been debunked over and over again.
It is no surprise, then, that the Reason Foundation’s Adam Summers in his op-ed in the Business Journal predicts dire consequences if California were to increase its minimum-wage law (“Higher Minimum Wage Will Lower Job Prospects,” Feb. 11). Summers, like many before him, conjures images of economic catastrophe, cautioning that “for local and state businesses teetering on the edge of survival, the increased costs of a minimum-wage increase could be the last straw.” As evidence, he points to efforts by a few companies to avoid compliance with a hotel minimum-wage law passed by Long Beach voters in November.
The fact that wealthy companies will try to find ways to pay their workers less than the law requires isn’t evidence the laws don’t work. Summers ignores the fact that approximately 1,900 Long Beach hotel workers have received a wage increase because of the new law, focusing instead on a couple of bad actors trying to find loopholes and avoid compliance. He also neglects to mention that the hotel minimum-wage increase was overwhelmingly supported not just by voters, but by small businesses in Long Beach, which understand that when the buying power of workers rises, it’s good for the economy. According to one study, the hotel wage increase will bring $7 million annually into that city’s economy.
Summers and other critics could learn a lot by looking at the large body of evidence about the economic impacts of minimum-wage increases in Los Angeles County. These statistics are consistent with research from across the country, which has shown over and over again that minimum-wage laws help workers without causing significant job loss or business flight – and are therefore good for the economy.
One of the most definitive studies of higher minimum-wage laws was released in 2005. Co-authored by two University of California economists and funded primarily by the Ford Foundation, the report examined the impact of the city of L.A.’s original living-wage law (full disclosure: Researchers with my organization, LAANE, co-authored the study). This ordinance, one of the broadest in the country, was enacted in 1997 despite furious opposition from business leaders, who warned of massive job loss and economic dislocation.
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