With cities like Seattle and Los Angeles already adopting a $15 minimum wage, a greater push is being seen around the country to raise the minimum wage on state and federal levels, and a group of Texas Democrats has introduced measures pushing for just that.
In a state where the state minimum is by default the federal, and with 6.4 million Texans working for hourly rates and 2013’s highest count of minimum wage workers, millions of Texans have the potential to be impacted by minimum wage hikes, and no doubt the state is in need of some serious reform to empower its hourly earners (much like the title loan reforms happening across the state), but an increase in minimum wage alone isn’t a lasting solution.
The Seattle Example
Seattle was the first city to enact minimum wage hikes after an outcry from service workers, with a schedule that saw an increase to $11 an hour ($10 for tipped workers) with a plan to have a $15 minimum wage implemented by 2017 for some companies, and 2021 for all companies.
Opponents of the measure have argued that the increase will force them to raise prices and cut workers hours, and conflicting statistics have come out both in favor and against those arguments. In reality, it’s far too soon to make accurate assessments on long-term employer actions based on the minimum wage increase. That’s not to say impact can’t be immediately seen, though.
Hourly restaurant workers in Seattle, especially those relying on tips as supplemental income, have seen their pay change. The city at large is fully aware of the wage increase, though, and public opinion views the matter more as a raise for industry workers than it does a cost of living adjustment. City residents have started tipping workers accordingly, with many restaurant employees already reporting a decrease in tip revenue, especially as those for $10 in tips will now become taxable rather than simply cash-in-pocket pay.
This puts a burden on the employer, too, who now has the responsibility of calculating tip income for each employee and making gap payments for workers who don’t reach the minimum threshold. This new burden has caused delays in timely and accurate payment, leaving more workers susceptible to illegal underpaying, whether intentional or not.
The Potential Cons
Something needs to be clear before anyone starts arguing for or against minimum wage raises based on potential impacts – those potential things haven’t happened yet. It would be faulty to say that these concerns are already proven facts, but they do represent real concerns on behalf of employers and employees.
Employers argue that increasing wages will force them to compensate for higher employee costs by cutting employee hours and/or number of overall employees. This concern is only fed by a Federal Reserve Bank of Chicago study stating that a 10% increase in the minimum wage lowers low skill employment by 2 to 4 percent.
Concern among employees comes in the form of increased competition. The fear is that an increase in minimum wage will have more overqualified workers competing for minimum wage jobs, forcing semi-skilled and unskilled employees out of their positions.
Core Problems That Aren’t Addressed
Regardless of a raise for those actually making the minimum wage, there are problems that an increase in hourly pay doesn’t address – poor policy and poverty.
The Pew Research Center found that in 2012, about 1.5 million Americans earned the minimum wage, but some 2 million people earning hourly wages were earning less than the federally mandated $7.25 due to exceptions to the Fair Labor Standards Act. These workers remain exempt regardless of state mandated wage increases unless measures are introduced to account for those workers, as well. An increase, alone, does not address policy concerns, and leaves more workers living without in a state where some workers are living with much more, effectively shrinking their ability to compete and participate in the economies around them.
It’s also been argued that raising the minimum wage does little to alleviate poverty, as few full time hourly employees are impoverished in the truest sense of the word. A wage increase would simply allow some who are struggling but not necessarily in true need to struggle less.
Again, this comes down to policy issues, with advocates stating that creating more jobs is more important than raising wages for those who already have them. This, they argue, is a more impact solution when it comes to truly alleviating poverty.
Wage workers in Texas have every reason to call for an increase, but upping the minimum wage alone isn’t an automatic fix. More inherent institutional issues and policy matters need addressing so that an eventual increase can be meaningful to both employers and employees, rather than a burden.