The Manhattan Institute, a highly-regarded, nonpartisan, independent research and educational organization is out with a new issue brief examining the economic impact of raising the federal minimum wage to $15 an hour.
This is an issue close to the mind of many New Yorkers after the recent decision by the state Labor Department to recommend raising wages for fast-food workers to $15 an hour by 2018 in New York City and 2021 in the rest of the state.
According to the executive summary, The Manhattan Institute concludes:
“We find that increasing the federal minimum wage to $15 per hour by 2020 would affect 55.1 million workers and cost 6.6 million jobs. Aggregate income among low-wage workers would rise by $105.4 billion, after accounting for income declines from job losses. However, only 6.7 percent of the increase in income would go to workers who are actually in poverty.
Because the exact effect of the minimum wage on employment remains unsettled, we check the robustness of our results by employing a range of estimates from the literature that imply modest, moderate, and severe employment consequences. In each case, we analyze how the change in earnings resulting from a minimum-wage increase would be distributed across income levels.”
We find it particularly interesting that the brief finds less than 7 percent of the projected increase in worker income would go to people living in poverty. Especially since advocates often cite lifting workers out of poverty as the primary reason drastic wage hikes are necessary.
We encourage you to read the Manhattan Institute’s full report and let us know what you think.