Profs conclude $15 federal minimum wage, supported by Biden, would result in 2 million lost jobs

A new report by Trinity University in Texas economics professor David Macpherson and Miami University in Ohio business professor William Even shows the potentially devastating consequences of raising the federal minimum wage to $15, a policy for which President-elect Joe Biden has expressed support.

The report, published by the Employment Policies Institute (EPI), states that although the COVID-19 pandemic has created massive unemployment rates, raising the federal minimum wage to $15 per hour also poses a major threat to unemployment.

The report specifically examined the 2019 Raise the Wage Act, which passed the Democratic-controlled House of Representatives but stalled in the Republican-controlled Senate. 

“Despite these obstacles, another threat to business profitability and jobs is gaining traction on the national stage. In 2019, the U.S. House of Representatives passed the Raise the Wage Act, which would enact a schedule of annual minimum wage increases to establish a $15 federal minimum wage by 2027,” the study stated.

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The Raise the Wage Act in 2019, which passed with only three Republican votes, would have increased the minimum wage each year until eventually reaches $15 per hour in 2027. The bill would have increased the minimum wage for tipped workers to $12.60 per hour according to the report.

Although the bill would have given a pay raise to 33 million Americans, it would also “result in 2 million jobs lost across the United States,” disproportionately affecting young Americans and women, according to the report.

“The Arts, Entertainment, and Recreation and Accommodation and Food Services sectors will account for half of these job losses. Workers aged 16-24 will see the highest proportion of job losses, and the majority of jobs lost will be held by women. Tipped workers will also lose a greater share of jobs affected by minimum wage than non-tipped workers—one in three tipped workers affected by this federal minimum wage increase will lose their job,” the report found.

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As many as 855,292 jobs could be lost among 16-19-year-old workers while 20-24-year-old workers could experience as many as 352,566 layoffs. 

“Women are also likely to experience significantly more job losses than men as a result of a $15 federal minimum wage. Analysis by the economists show that not only are 59 percent of minimum wage jobs held by women and slated to be affected by these wage increases, this means that 1.2 million jobs held by women will be lost by 2027 due to this policy, accounting for 61 percent of total losses,” the study found.

While job losses among young people and women would be substantially high, tipped workers would also be subject to significant job losses.

The report stated that “while 1.3 million non-tipped workers and 693,000 tipped workers will experience job loss by 2027, the number of jobs lost for tipped workers represents a much higher proportion of affected jobs. Nearly 31 percent of tipped workers affected by this rise in minimum wage will lose their jobs by 2027, while only 9 percent of non-tipped workers affected will lose their jobs.”

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Texas, Pennsylvania, and Florida would be the three hardest-hit states, with the Lone Star State at risk of losing up to 370,664  jobs, the Keystone State at risk of shedding 143,402 jobs and Florida potentially having  133,328 fewer jobs.

”In a study that particularly focuses on impacts in Florida, where increasing the state minimum to $15 is on the ballot this November, the economists note the vulnerability of these projections: due to COVID-19 and other economic factors, a wider range of businesses and jobs may be affected by a rapidly rising federal minimum wage than even presented in this analysis.”

Florida voters approved a November 3 measure to raise the state’s minimum wage to $15.

A majority of Democratic candidates who ran for president in 2020, including President-elect Joe Biden, supported a $15 minimum wage. In September, Biden stated that he supports a $15 dollar minimum wage and ending tipped minimum wage.

Even told Campus Reform that the study reminds of the potential downside of a minimum wage increase: “While proponents of a $15 minimum wage point to the positive effects on the incomes of the affected workers,  our study serves to remind people of the potential downside created by the potential job losses for nearly 2 million workers.  While affected workers who keep their jobs are better off with a higher minimum wage, many workers will lose jobs and many new entrants will have greater difficulty finding their first jobs.”

Campus Reform reached out to Macpherson, Trinity University, and Miami University for comment but did not receive a response in time for publication.

Follow the author of this article on Twitter: @MN_turn