Step one of my plan to support Montana's communities is to raise the minimum wage to the point where a full-time job can make ends meet. All Montanans should have the opportunity to live a fulfilling, meaningful life, and bringing the minimum wage up to meet increases of both productivity and cost-of-living will be a powerful step toward that goal.
My plan is to implement a gradual increase of the minimum wage to fifteen dollars per hour. So that Montanans can make an informed choice, I have fact-checked some of the more prevalent claims about a minimum wage increase below.
Myths vs. Facts on Effects of Raising Minimum Wage
Myth: High minimum wage hurts small businesses who can’t afford employees.
Fact: “53% of small business owners agree that with a higher minimum wage, businesses would benefit from lower employee turnover and increased productivity and customer satisfaction”
Source: Business for a Fair Minimum Wage: Small Business Owners Favor Raising Federal Minimum Wage: Results from a Scientific National Poll of Small Business Owners with Employees. (July 2014)
Myth: Raising the minimum wage will result in more layoffs.
Fact: “In the 22 instances when the federal minimum wage went up [since its creation in 1938], the change in total private employment after one year was positive 15 out of 22 times (68.2 percent). In the 16 instances when the federal minimum wage was increased since 1964 (the earliest year for which this data is available), total hours worked increased 10 out of 16 times (62.5 percent). In the leisure and hospitality sector, which includes restaurants, hotels, and amusement parks, employment rose one year after a minimum-wage increase 18 out of 22 times (81.8 percent). In retail employment, positive changes occurred 72.7 percent of the time after an increase.”
Source: National Employment Law Project: Raise Wages, Kill Jobs? Seven Decades of Historical Data Find No Correlation Between Minimum Wage Increases and Employment Levels. By Paul K. Sonn and Yannet Lathrop (May 5, 2016)
Myth: Higher minimum wage will make products prohibitively expensive.
Fact: Research done by the University of Washington following Seattle’s minimum wage increases have shown that although many business owners reported that they had expected to raise prices in response to the new laws, “By and large, across most retail sectors, [the study] found little or no evidence of price increases in Seattle relative to the surrounding area.”
Source: The Seattle Minimum Wage Study Team: Report on Baseline Employer Survey and Worker Interviews. Seattle. University of Washington (2016)
Myth: There is no link between higher minimum wage and economic growth.
Fact: “Economists generally agree that low-wage workers are more likely than any other income group to spend any additional earnings they receive, largely because they must in order to meet their basic needs. Higher-income individuals, corporations, and beneficiaries of corporate profits are more likely to save at least a portion of any additional income. Thus, in a period of depressed consumer demand, raising the minimum wage can provide a modest boost to overall economic activity because it shifts income to workers who are very likely to spend it immediately. Indeed, recent research from the Federal Reserve Bank of Chicago finds that raising the federal minimum wage to $10 could increase U.S. GDP by up to 0.3 percentage points in the near term”
Source: Economic Policy Institute: Raising the Federal Minimum Wage to $10.10 Would Lift Wages for Millions and Provide a Modest Economic Boost. By David Cooper (December 19, 2013)
Myth: Higher wage do not impact net participation in welfare programs.
Fact: “The estimates on benefit amounts indicate that raising the minimum wage to $12 by 2020 would generate $17 billion in annual savings to means-tested government assistance programs. Again, this savings estimate is conservative because it does not include savings from Medicaid, nor does it account for workers earning wages above the $12 minimum wage who might also get a raise as employers adjusted overall pay scales.”
Source: Economic Policy Institute: Balancing Paychecks and Public Assistance: How Higher Wages Would Strengthen What Government Can Do. By David Cooper (February 3, 2016)