Last week, San Francisco voters approved a ballot measure that proposed a minimum wage hike to $15 per hour. The measure passed with 77% of the vote. The citywide vote contrasts with Seattle’s method of approval which relied on City Council passage.
San Francisco’s new law will increase the city’s current minimum wage of $10.74 to $11.05 by January 1, then to $12.25 in May. From there, the city’s minimum wage is set to increase every year until it reaches $15 per hour by 2018. The yearly increase will be based on inflation in the Bay Area.
Upon the measure’s passage, San Francisco Mayor Edwin Lee gleefully declared that the city can now “take on the growing gap between rich and poor.”
Mayor Lee may be surprised to find out that, according to leading economists, San Francisco’s new minimum wage law will not reduce poverty levels. In fact, economists have found that minimum wage hikes may have the opposite effect.
Economist David Neumark set out to examine the effects of higher minimum wage on poverty levels in his book called “Minimum Wages,” published by the Massachusetts Institute of Technology Press in 2008. Neumark compiled and analyzed 100 studies conducted by economists on the minimum wage. He found that “minimum wages do not, on net, reduce poverty or otherwise help low-income families.” Perhaps most revealing, Neumark also concluded that minimum wage hikes “may increase poverty.”
Neumark is not alone in his findings. In a 2011 study on the effects of minimum wage hikes in Canada, economists found that a “10 percent rise in the minimum wage led to a 4 percent to 6 percent increase of those in poverty.” The study concluded that “a higher minimum wage may paradoxically result in a significant negative shock to household income among low-income families.”
Multnomah County in Oregon is the latest local government to ignore economists’ findings. The county—which included Portland—struck an agreement with AFSCME Local 88—the county’s largest employee union—to raise the minimum wage to $15 per hour for county employees.
City of Portland employees have begun sounding the bell for a $15 minimum wage, circulating a petition demanding the wage hike. However, the possibility of a citywide $15 minimum wage hit an early road block when Nicholas Caleb, a far-left candidate for Portland City Council, based his election on the proposal and lost.
Additionally, under Oregon state law, Portland is prohibited from enacting a unilateral wage hike. In a move to pave the way for a future opportunity to enact a $15 minimum wage, State Rep. Rob Nosse said introduce a $15 minimum wage measure during Oregon’s 2015 legislative session.
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