7.4 - The Minimum Wage Debate

Increasing the minimum wage will substantially improve the living standards for many women and families. Why hasn’t it been done yet? Why the delay from 1997? One answer is that a debate rages about whether or not increasing the minimum wage will hurt businesses and cause them to cut back on available jobs. Yet several studies show that raising the minimum wage does not cause overall job loss. One study, published in The American Economic Review, tracked the impact of the minimum wage increase by the state of New Jersey in the fast-food industry and found, “no evidence that the rise in New Jersey’s minimum wage reduced employment in fast-food restaurants in the state.”²⁷

A different study, released in 2004, did a comparison between states with the federal minimum wage of $5.15 per hour, and those that have passed a higher minimum wage to see if there was any impact on small businesses.²⁸ This study found that small business job growth in the states with an increased minimum wage was actually higher than in states that have the lower federal minimum wage, and that small businesses with fifty or fewer employees weren’t hurt by the state minimum wage increases. To the contrary, the report notes, “using the latest Commerce Department data, employment and payroll growth in the higher minimum wage states performed better than in the remaining states.”²⁹

In addition, a study of the previously mentioned living wage increase at the San Francisco airport found that businesses realize savings through lower turnover, recruiting and training costs, fewer disciplinary problems, and a more engaged workforce.

Mothers comprise a substantial portion of the citizens struggling to live on minimum wage. “An analysis of low-wage workers shows that the main beneficiaries of this one-dollar increase [from $5.15 an hour to $6.15] would be working women, almost one million of whom are single mothers,” found a study published by the Economic Policy Institute. “In fact, of the 11.8 million workers who would receive a pay increase as the result of this higher minimum wage, 58 percent would be women, simply because, as a group, they earn lower wages than men. As a result, a minimum wage increase would help to reduce the overall pay gap between women and men.”³⁰

A federal minimum wage increase will improve the lives of working mothers more than most for two reasons: Women are more likely to be stuck in minimum wage jobs, and mothers on average earn lower wages than non-mothers and men. The federal minimum wage must be raised.