What Will Happen If We Raise the Minimum Wage?

What Will Happen If We Raise the Minimum Wage?


(gentle music) – So before I was the amazing YouTube host that you see before you today, I worked a minimum wage
job at a donut shop. This is the actual shirt that I wore when I worked there for two years. Now, I mean, the job had obvious perks. Oh, would you look at that, just like these right here. But the pay? (mumbles) The pay, that wasn’t so great. (record scratches) This is great. Minimum wage is the absolute lowest wage that the law allows a
business to pay a worker. Nationally, the U.S.
Government has that set at a number of $7.25 an hour, and it’s been that way for ten years. But my job was in Oakland, California, which passed its own minimum wage law, so I got $12.25 an hour. So, if I got paid five bucks an hour more than the federal minimum wage, isn’t that a good thing? Well, Oakland is part of the Bay Area, which is one of the most expensive places in the entire country. I’m talking $7 coffees, and $1,500 bucks a
month to rent a bedroom. No, not an apartment, the bedroom. No kitchen, no living room, just one room, with four other people
also renting a room. It’s crazy. That’s why I still live with my mom. Thanks mom! Now if I had that same job at a donut shop in say, Houston, Texas, I’d be getting that same $7.25 an hour, because that’s what the
minimum wage is there. And that brings us to the
never-ending minimum wage debate, some think $7.25 an hour
is way to low to survive on no matter where you live, even if where you live is cheap. They wanna raise it to $15 an hour, so no matter what city
or state you work in, you can’t make less than that. Others think that the minimum wage isn’t designed for people to survive on. It’s supposed to be an entry-level wage for workers with no skills to get a foot in the door, gain skills, and then quickly move on
to higher-paying jobs. Raising it could force
businesses to fire workers and raise their prices, which could hurt the economy. So, should the U.S. raise
the federal minimum wage? The reason people are talking
about the minimum wage today is because of what
happened seven years ago in late 2012. Hundreds of fast food
workers in New York City walked off their jobs,
demanding better pay. The reason? Minimum wage wasn’t enough to get by on. Those strikes snowballed into
the Fight For $15 movement, which went national, and pushed to raise the
federal minimum wage from $7.25 an hour to $15 an hour. Democrats in the House of
Representatives took notice. They recently passed a bill that would raise the minimum wage to $15 an hour by 2024. But, Republicans in the Senate have no plans on taking up the bill. And, president Trump has
threatened to veto it if it ever does pass. So it pretty much has zero
chance of passing right now. But if you really wanna understand
the minimum wage debate, you’ve gotta go back even
earlier, to the late 1800s. Historians called it the Gilded Age. Business was booming, but
there was massive inequality, almost all the money was going
to the people at the top, dudes with top hats and monocles
who owned the railroads, and most of the businesses,
and Boardwalk and Park Place. Now we all know, you just can’t win when someone owns
Boardwalk and Park Place. Basically, these guys had all the power, and didn’t pay their workers well at all. In 1890, the average
American made $380 a year, that’s $11,000 in 2019 dollars. That can get you, what, maybe three month’s worth
of rent in San Francisco? Maybe? When the Great Depression
hit in the 1930s, President Franklin D. Roosevelt wanted to do something about inequality. In 1938, Roosevelt signed
the Fair Labor Standards Act, which set the first ever national minimum wage at 25 cents an hour, which would equal about $4.45 today. Since that time, Congress has increased
the minimum wage 22 times. The current level of $7.25
was last set in 2009, when President Obama signed it into law. And that’s what makes
the minimum wage debate in the U.S. different. Many other countries tie the
minimum wage to inflation. See, as time passes, money is worth less. $100 in 1900 could buy way
more than $100 could today, so tying minimum wage to inflation means that it increases
automatically every year or two so that it doesn’t lose its value. The U.S. requires a new law every time to raise the minimum wage. That means the House,
Senate and the President all have to sign off on it. And they don’t agree on stuff that often. That’s why we have the
same minimum wage we’ve had for the last ten years. And over that time, it’s
lost 16% of its value, that $7.25 an hour is
now worth $6.10 an hour. Now, here’s where things
get a little complicated. States, counties, and
even cities can pass laws to set their own minimum wage. It just has to be equal to or greater than the federal minimum wage. For example, in California,
it’s $12 an hour, but in the City of San
Francisco, it’s over $15. Looking at the country as a whole, 21 states have a minimum
wage of $7.25 an hour. But in the other 29 states plus D.C., there’s a higher minimum wage. And then there are counties
and cities peppered throughout with their own minimum wages. For many supporters,
raising the minimum wage is a basic issue of fairness in a society where income
inequality keeps rising. They think putting more money in the pockets of low-wage workers is an effective way to reduce poverty. Let’s look at the numbers. $7.25 an hour works out to $58 a day if you work eight hours. So if you work five
days a week, every week, nonstop for an entire year, you’d make a little over $15,000. Check out this poverty chart
from the federal government. A worker supporting a family of two would be almost $2,000
below the poverty line. So, what happens if you raise
their wages to $15 an hour? A report from the
congressional budget office calculated that it would boost the pay of 27 million workers, and it would lift 1.3 million
people above the poverty line. It’s also important to understand who the typical minimum wage worker is. An old stereotype is that they’re mostly just teens in high school who need a little extra spending cash. Now, it is true that
teens make up a big chunk of minimum wage workers, but more than half are over 25. A lot of these workers
make so little money that they qualify for some
form of government assistance like food stamps or housing support. One study by the Economic Policy Institute found that for every dollar
the minimum wage is increased, spending on government
assistance drops by $5.2 billion. So, if companies had to
pay their workers more, it would actually save
the government money. Now, it’s one thing to talk about increasing the minimum wage in theory, but what does it actually
look like on the ground? To figure that out, we hit
the streets of San Francisco, which has one of the highest
minimum wages in the country, at $15.59 an hour. We talked to a 25 year old who makes slightly above
that at a local supermarket, and the owner of multiple
packing and shipping stores who employs minimum wage workers. He’s also the president of a
local merchant’s association that was against raising the
minimum wage in San Francisco. – If my pay was $7.25 now, at this point, it would be very difficult. I would probably be
working seven days a week, six days a week, and really
having to penny pinch, and really learn how to budget, you know? But now, now that I’m making
a little bit more money, that gives me a little bit play room, a little bit time to stretch, you know. And it makes me able to do more things. – The business owner has
a slightly different take on raising the minimum wage. – The worst case
scenario, from my opinion, is that, if minimum wage goes too high, you’re gonna see a lot of
companies consider other options, eliminating the human. My response to that was, is, I invested in a lot of technology, which reduced a lot of the labor-intensive parts of my business, so I wound up hiring less people. And now I employ a lot less people and I have more locations. So the net effect is I’m
employing less people. – And this brings us to the major argument against raising the federal minimum wage. A lot of people think it’ll kill jobs. Think about it, increasing
the minimum wage means businesses have to spend more money to pay their employees. And not every business
is like Amazon or Apple, with endless amounts of money. Many are small mom and pop shops, so they might have to cut
back on employee hours, or lay people off. Economists have been arguing for decades about whether or not raising
the minimum wage kills jobs. Many agree that a small increase won’t, but going from $7.25 to $15 is not small. It’s more than double. A report from the
Congressional Budget Office predicts that a $15 minimum wage could force employers to
lay of 1.3 million workers. And if you’re a teen, sorry, but they’re usually the first to go, because they have the
least amount of skills, and it’s just not cost-effective
to pay them a high wage to essentially learn on the job. If we did increase the minimum wage, some economists worry about what that would do to the economy. With higher wages, many businesses would have to raise their
prices to pay for it. Over time, that could
increase the cost of living, and low-wage workers might
be back to square one, where everything’s too expensive compared to how much money they’re making. – Somehow people thought that, “Hey, “you’re going to raise the minimum wage, “and everyone’s gonna have more money.” But you don’t realize that, okay, well, someone’s making $10 an hour, and his wage goes up to $15, well, that hamburger that
he’s been buying for $10, now is probably gonna go up to $12 or $13, provided that nothing else goes up, other than the minimum wage. – Other businesses might do the opposite. They might do the math, figure they can’t afford the higher wages, and just shut down. All right, you’ve heard
the major arguments for and against raising the minimum wage. There are a lot of potential pluses, and potential minuses,
and even experts disagree. But what do you think
we should do, and why? Let us know in the comments below. And if you like crunching numbers, check out an episode we did all about universal basic income. And for all you teachers, if you wanna bring this
topic into the classroom, check out on our web site, KQED Learn. I’m your host, Myles Bess. Peace out, blessings, hugs and kisses, I’m gonna go finish the
rest of those donuts. See ya later!

19 comments

  1. Hey everyone! So it might seem obvious to anyone working a minimum wage job that an increase would be a good thing — but what about the big picture for the economy and jobs? Watch the video and hear from both sides of this controversial topic. And, as always, let us know what you think.

  2. 1. States should absolutely adjust their own minimum wage to meet the needs of their citizens, but a Federal law will never meet the needs of workers in both San Francisco and rural Wyoming.

    2. Minimum wage hikes are always associated with a spike in inflation, which disproportionately affects the very workers it also helps. It has diminishing returns.

    3. The biggest proponents of raising the minimum wage sometimes aren't earning anything close to it. Big unions often have wage structures that are a multiple of minimum wage, so a $3 raise for MW workers could mean a $9 raise for an already-middle-class worker. This isn't necessarily good or bad, just be aware of who is making the argument, and what their own motivations might be.

  3. If the purpose is to decrease income inequality, a universal basic income would be far more effective and efficient, and it would be far more empowering to low income workers, who could afford to walk away from jobs that were poorly compensated, and would still have access to them when needed.

  4. It may be hard to scrape by in the Bay Area on $15/hr, but plenty of people can and do live comfortably on less in other parts of the country. Nothing wrong with local laws taking care of local problems.

  5. You made it controversial when it is not really…
    The job that will disappear are useless and harm human dignity. These jobs do not exist in some part of europe and that's good. After the state need to allow capital for unemployed too (so that they educate themself, eat, look for job or not depending on how exploiting the job market is etc). After keynesian multiplier etc will make the economy better.
    Also poverty cost a lot of money (through health, crime etc).
    Many things to say and asking a person on the street is unhelpful…

  6. It will be good if y'all make a video about minimum wage and the cost of living in USA against another country with a lower minimum wage, idk maybe india, mexico, china or someplace like that.

  7. Good video looking at both sides, all business are different and can afford different things. When you increase the minimum wage those businesses that can barely stay afloat die and all those employees will go unemployed and live off of welfare instead and thus increasing the taxes.

    You harm those who are already struggling, some businesses cant continue and many people who used to have a wage are now making even less on welfare. Some businesses will just hire less people instead and those are now also unemployed, meanwhile the people have more money and these is less products so the cost of the things we need will also increase.

    Take Sweden as an example here, we have no minimum wage laws at all, a business is allowed to offer their employees 1 cent an hour, but people dont put up with that so of course if they offer that little they get no employees at all. Meanwhile our wages are fairly high in sweden how can that be the case, we have no laws aobut wages yet the wages are fairly high. Because we allowed companies to decide for themselves about wages, they arent afraid to pay a higher wage, and the people are also used to higher wages so you need business model that can afford that high a wage to the employees.

    Raising the minimum wage will be a zero sum game for most people who work at a minimum wage, the price of the products goes up some, and taxes goes up some to level the playing field once again, you earn more but after taxes you can afford the same amount of products.

    You dont make people richer by increasing the minimum wage, you make people richer by lowering the unemployment rate so companies have to compete with one another more for the employees so they dig deeper into the barrel (metaphorically speaing) and in order to fill their ranks of employees they also need to attract them by raising the wages, or other good things for the people.

    What happens will be the opposite if you force companies to pay more, they will withdraw worker benefits and create a harsher job climate because they cant risk an unproductive employee, because its to expensive.

    To increase the wages you lower unemployment, which makes less people live off welfare and thus lowering the taxes which instantly is good for everyone even those at the bottom. You increase productivity so more products on the market and thus lower cost of products which is also good for everyone yes even those who are on welfare and on top of the companies needs to compete harder for employees and one of those means to attract employees is a good work place, higher wages or other benefits.

  8. It seems unreasonable to talk about the minimum wage when you use one of the most expensive cities to live in as an example, especially when that city is the NIMBYism capitol of the united states.

  9. If even the economic experts disagree, how can I be expected to have a proper opinion?

    Edit: 9:13 timestamp

  10. Looking at all the cities in the country, there are huge differences in cost of living. Maybe the federal minimum wage should be based on the particular cost of living for each city, i.e., it would vary from city to city. A full-time employee making minimum wage needs to at least be able to afford the basic cost of housing, food, clothing, healthcare, etc.

  11. In my opinion a person should make at a minimum whatever the average cost of living is to support the basic needs of themselves plus one child in the state they work in. If the cost of living increases the next year, so should their wage. A federal minimum wage might help areas of higher economic health, but businesses in lower cost of living areas may suffer leaving more people unemployed and taking away commercial services and resources to the residents of that area.

  12. I suppose it depends on the economy you live in
    Small town in Michigan, the price of everything has gone up EXCEPT minimum wage and our homeless population is becoming an epidemic.
    Without question minimum wage needs to be raised

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