Yesterday the Governor signed into law an increase of the minimum wage to $11 by 2017. This is projected to raise the wages of approximately 605,000 workers.
Two MassBudget fact sheets provide data on who these workers are and where they work. The Regional Impact of an $11/Hour Minimum Wage provides estimates of the number of workers in specific cities and regions of the state, including this table:
Rewarding Work: The Data on an $11 Minimum Wage provides statewide data on workers whose wages will increase:
Together they are one-in-five wage earners in the Commonwealth.
Over 85 percent are twenty years old or older – and younger workers who are helped are often working to pay for college or to help their family with basic expenses.
57 percent are women.
140,000 are parents – and 236,000 children live in households that will be helped by the increase.
While these 605,000 workers live throughout Massachusetts, some cities and towns have particularly high concentrations of the labor force employed in low-wage work. Raising the minimum wage will tend to have a greater impact in these areas, especially because workers who receive wage increases are likely to spend a portion of those increases locally, thereby supporting local businesses and boosting the local economy.
…that we will in fact see the indirect benefits for those already making just above $11/hr? It certainly makes sense to adjust payscales in the way you suggest, but I can also see businesses flattening the payscales if they are feeling squeezed.
For every dollar that is put into the economy, there is a greater impact on the economy. While there’s some debate over how large it is (some claim as high as 5x the investment, others say it’s closer to 1.5 or 2x the investment), it’s pretty clear that it’s there. Democrats often try to do this with stimulus and investment, Republicans prefer tax cuts, but both are trying to get to the multiplier and maximize it.
It’s especially pronounced when dealing with minimum wage earners. If I’m earning $9 an hour and I start earning $11 an hour, I can afford to buy “basic luxuries,” such as going out to eat (more money for food producers and more money to pay waitstaff), toys for my kids (which helps toy stores and manufacturers), and perhaps I can afford to take a vacation (which helps the tourism industry).
The increased economic output not only helps businesses pay employees at a higher minimum wage, but it also leaves money left over to hire extra help, pay employees more, or allow business owners to have extra profit to spend at other businesses (a fancy car dealership, for instance).
But there’s another part. People getting paid $11.25 an hour now don’t make that because it’s “fair” — they make $11.25 an hour instead of $8 or $9 because there’s a competitive labor market, and an offer of $8 or $9 wouldn’t bring in the quality or skillset the employer needs to get the job done — so the employer pays $11.25 instead.
Now sometimes the $11.25 job is “easier” than the $8/hr job — it just requires some skill or education. But other times folks get paid $11.25 because the labor required is much more strenuous or its more dangerous or the hours are terrible, etc. People take the job over an $8/hr job because the extra pay is better than the extra suck is bad. Well, now that minimum wage will pay $11, folks won’t work the super-crap job for $11.25 any more. Their employer will have to raise the salary above $11.25 or lose the employees to other jobs.
That’s why raising the minimum wage to $X doesn’t just directly benefit those people who make less than $X. Plenty of people who make more than $X will be in a position for a raise too, because the labor market is competitive.
Surely the preson who made that chart isn’t from MA. Otherwise s/he would know the correct terms.
Makes you wonder about the rest of it.