Raise the Wage Act reintroduced, still wouldn’t help workers

Rep. Bobby Scott (D-VA) has reintroduced the Raise the Wage Act, which would raise the federal minimum wage from $7.25 per hour. Previous versions would have raised it to $15.00 per hour. The new version would raise it $17.00 per hour. Most of the rest of the bill remains the same.

This means that most of the reasons why the bill is a bad idea also remain the same. I wrote a paper in 2019 about the Raise the Wage Act, and about minimum wages more generally. While some of the numbers have changed a bit since then, the main arguments remain the same. While minimum wages help some workers, these are at canceled out by tradeoffs paid by other workers and consumers:

A partial list of minimum wage tradeoffs includes differing regional impacts, layoffs, reduced non-wage compensation, a tax increase for low-income workers, fewer job openings, longer job searches, reduced hours, stricter policies for arriving late or leaving early, increased automation, higher insurance co-pays, less vacation and personal time, reduced or eliminated on-the-job perks, reduced employee discounts, less flexible hours, higher consumer prices, more outsourcing, higher youth unemployment, fewer minority workers hired, more abusive behavior by bosses, and higher crime rates. There are almost certainly additional tradeoffs. The mix will vary from company to company and from worker to worker, but they will generally at least cancel out the positive effects.

If the goal is poverty relief, policymakers should focus instead on occupational licensing, regulatory reform, permitting reform, tariff relief, and other pro-growth measures. Direct cash payments and the EITC are better targeted at helping people in poverty than the minimum wage; many minimum wage earners are either teenagers or part-time workers who live in middle-class households. They are rarely their housholds’ sole earners.

The Raise the Wage Act’s bill text is here. My minimum wage paper is here. I wrote an op-ed arguing for more effective poverty relief methods here.