Paychecks were growing before minimum wage hikes
A total of 24 states have increased or plan to increase their minimum wage. According to some advocates, this is supposed to raise wages for low-paid workers and improve their living conditions — the assumption being that without government action, low-paid workers would not see their wages rise.
Data shows, however, that wages have been rising in the absence of minimum wage hikes. Additionally, only a small proportion of workers are helped by higher minimum wage mandates contrary to common belief.
According to the Census Bureau’s Current Population Survey, only 119,000 workers on average had their pay raised directly by each of the 51 state and local minimum-wage hikes between 2016 and 2019. That’s because even those in the 10th income decile—people who earn less than 90% of their peers—made $467 a week in December 2019. That’s $11.52 an hour, far higher than the federal minimum of $7.25 as well as most state and local minimum wages.
And because minimum wage workers make a very small percentage of workers, minimum wage hikes only contribute to a tiny portion of the overall wage increases.
All told, the recent minimum-wage hikes directly increased total wages by $4.2 billion over a three-year period, including for workers whose wages fell somewhere between the old and new minimums. But the increase in wages for production and nonsupervisory workers (those likely to be paid hourly) over that period was $325 billion. So minimum-wage hikes directly accounted for only 1.3% of the total increase in the earnings of hourly workers over that period.
The fact of the matter is that minimum wage workers continue to make a smaller and declining proportion of workers. And this is mainly because employers are raising wages due to rising productivity.
Minimum wage hikes help a tiny percent of workers but at the expense of other workers who are usually laid off, have their hours cut, or see their jobs completely disappear as companies stop creating jobs or automate.
States should not tap themselves on the back for something that the labor market is accomplishing not because of their efforts but in spite of their efforts.