New York (CNN Business)Nearly seven years ago, a week after Black Friday, a few dozen workers walked off their New York City fast food jobs to demonstrate for higher pay. The median wage for fast food workers was $9 an hour, CNN reported at the time. The demand that would soon emerge as the movement’s rallying cry — $15 and a union — seemed hopelessly ambitious, like a wild-eyed opening bid.
This week, the House of Representatives will vote on the Raise the Wage Act, which would make $15 an hour a reality for nearly all American workers by 2024, up from the current national minimum wage of $7.25 an hour. And it’s expected to pass.
“It created this snowball,” says Mary Kay Henry, president of the Service Employees International Union, which helped organize the Fight for $15 movement behind the scenes. “And then employers started raising the wage — all these people we didn’t expect. It became natural to think about, why not try to do it at the federal level?”
Those are the places where a $15 minimum wage could make the most difference in peoples’ lives, because so many workers there currently make less than that. For the same reason, they’re also the places that face the highest risk of job loss as a result, because businesses will have to spend more to comply.
Will it cost jobs, and does it matter?
But most of those increases have been in relatively hot job markets, where — at least in the past few years — employers have no choice but to cough up to stay fully staffed, even if it means raising prices. That could be a different story in places with weaker local economies, where businesses are operating on thinner margins and don’t have as much room to charge more.
The verdict: By 2025, the legislation would raise the wages of 27 million people and lead to 1.3 million fewer jobs, or 0.8% of total employment. They arrived at that conclusion by averaging numbers that represent what other studies had found to be the employment “elasticity” — the sensitivity of jobs to changes in the minimum wage.
The CBO heavily emphasized the uncertainty around those estimates, but both sides immediately seized upon parts of the report as evidence to support their positions, while some criticized its methodology.
“What we had to do is reconcile a lot of the past literature,” says Dube, who provided input to the CBO on an earlier draft. “We specifically show what the problems are with some of those papers. What I see is peculiar choices that, in my opinion, are not justified that clearly affect the final outcome.”
Others saw the CBO study as an effective synthesis of a complicated literature, and cause for scaling back the bill to something more modest. Daniel Hamermesh, a distinguished scholar in economics at Barnard College who has also published papers on the minimum wage and reviewed CBO’s report ahead of time, called it “extremely good and extremely fair.” Because of the employment effects of the $15 option, he favors $12, which is projected to have only a mild impact.
“This is closer to religion than anything else,” Hamermesh said, of the two sides of the minimum wage debate.
Methodological quibbles aside, progressives argue that it’s important to focus on the overall welfare impacts of raising the minimum wage, as well as possible government responses to help anyone who may end up without a job because of it.
David Howell, a professor of economics and public policy at the New School, says that raising wages significantly for those at the bottom of the income distribution is more important than simply preserving low-paid employment.
Half of the projected 1.3 million lost jobs are those held by teenagers, he points out, many of whom could be employed through work-based learning programs that would provide a better on-ramp to a career. Everyone else, given the strong demand in America for workers in fields like nursing and construction, could be retrained for higher-paid work.
“The American problem isn’t quantity of jobs,” Howell says. “It’s quality of jobs.”
Both sides dig in
After several months of inter-party lobbying, the Democratic caucus seems to have come around to support the bill. Members of the moderate New Democrat Coalition were reassured by the addition of an amendment that would require a study of the effects of the bill a few years in, leaving room to make adjustments if more jobs have been lost than anticipated.
“If the House proceeds and passes $15, that’s a dead letter, it’s going nowhere in the Senate, and any momentum for a compromise that could be enacted into law dies,” said Neil Bradley, the Chamber’s chief policy officer.
To the charge that businesses already should be able to stomach higher wages, given the massive corporate income tax cut they received in 2017, Bradley responds: “We don’t believe that the government has a claim on everyone’s income and gets to return it when it sees fit.”
There may be room for compromise on the House side in order to get something through the Senate this session.
“If they have an interest in talking, we’ll obviously talk,” said Representative Bobby Scott, who, as chairman of the Education and Workforce Committee, has pushed the bill forward. He’s coy, however, on how far he’s willing to go. “I’m not going to say I’ll accept this or that.”
Even if nothing passes before the 2020 election, the union that pushed $15 onto the national stage sees the debate as a way to galvanize support among voters. The aim is to elect a Democratic Congress that wouldn’t have to compromise at all — or persuade Republicans to change their minds.
“We want to use the Raise the Wage Act going to the Senate as a way to inject it into Republican-dominated states and districts,” said Henry, of the SEIU. “The fight we want to have is to convince them that the political price they would pay for voting against it is not worth it.”