The Fight for $15 Wages War on Working Families
By Rep. Virginia Foxx
Washington, July 17, 2019
Tags: Jobs and the Economy
A look at the latest jobs report shows that pro-growth policies like the Republican Tax Cuts and Jobs Act and regulatory reform are working well for the American people. Wages are on the rise, jobs are being created and unemployment has reached a 50-year low. Many businesses and workers are seizing these opportunities, but there is still more work to be done. Right now, there are 7.4 million open jobs in our economy that need to be filled—many requiring skilled workers.
Last Congress, the House Education and Workforce Committee worked hard to address the skills gap when we passed the Strengthening Career and Technical Education for the 21st Century Act with strong bipartisan support. Now, the new Democrat majority has moved from supporting workforce development at the local level where vacancies exist to mandating a nationwide $15 minimum wage. Liberal activists believe this arbitrary policy will draw more people into the workforce and increase earnings. If it becomes law though, it will achieve the exact opposite and turn back the clock on the economic progress made over the last few years.
With nearly full employment and a shortage of workers, employers already offer competitive wages and benefits to attract and retain workers. Yet, House Democrats are backing H.R. 582, the Raise the Wage Act, which would more than double the federal minimum wage from $7.25 to $15 an hour by 2025 and then automatically increase it each year after. Last week, the Congressional Budget Office (CBO) published its study of this bill, finding that up to 3.7 million jobs would be lost from a $15 minimum wage, with a median estimate of 1.3 million jobs. Economists at the Employment Policies Institute project that in North Carolina it would cost 91,802 jobs in 2020 alone. This is not the future North Carolinians want, and they deserve to know the truth.
99.6% of North Carolina’s companies are small businesses, employing 44.3% of the private workforce. 20% are minority-owned and 75% of all businesses in rural counties have fewer than 10 employees. In 2016, the median income for North Carolinians self-employed at their own incorporated businesses was $43,867; at unincorporated firms it was $21,134. Mandating a $15 minimum wage would decimate the mom and pop shops that provide livelihoods for so many and are the pride of our communities, both urban and rural.
Furthermore, almost half of the workers paid at minimum wage are individuals under the age of 25 who are at the start of their careers or filling part-time or summer jobs. In 2013, economists at Texas A&M used Census Bureau data to determine the percentage of minimum wage employees that stay at minimum wage. They found that of the employees who remain in the workforce, over 65% receive a pay raise within a year. With Democrats’ one-size-fits-all minimum wage, we run the risk of seeing such entry-level, part-time and summer jobs eliminated.
On the surface, CBO’s report shows that a $15 federal minimum wage would move 1.3 million individuals out of poverty. However, looking deeper, the Raise the Wage Act would, at best, redistribute poverty by eliminating one job for every individual moved out of poverty, and as many as three jobs.
Now let’s look at how those who initially benefit from the wage hike would fair long-term. CBO found that there would be a net reduction of $9 billion in family income by 2025. In other words, this so-called raise will eventually reduce pay for many families. As higher labor costs are absorbed by business owners, reduced income would cause businesses to increase prices for consumers; higher wages don’t automatically translate into higher purchasing power. These basic economic principles detailed in CBO’s report indicate that the $15 minimum wage would harm low-income individuals and families.
Right now, America is in the midst of the longest period of continuous jobs growth on record, with workers and families reaping the benefits. Unemployment continues to hold at historic lows, and wages are rising as opportunity abounds. Giving American workers, students, and families the options they need to enter our competitive workforce is the best way to continue this era of prosperity. The Raise the Wage Act would hurt the very workers and businesses who are driving our roaring economy and creating opportunities.