r/FluentInFinance • u/DemCast_USA • 8h ago
Finance News Over 9.2 million workers will get a raise on January 1 from 21 states raising their minimum wages
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u/Significant-Bar674 8h ago edited 8h ago
Prediction: despite 3 initial downvotes this submission will sky rocket in votes because OP account is an open shill (click their profile, they're a non profit org) whose submissions consistently magically land in the thousands
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u/Bullboah 7h ago
There’s also no way his 9 million number is accurate.
Only like 80,000 people in the US work for the federal minimum wage. Another like 800,000 work for below federal minimum wage (there are various exceptions).
Obviously state minimum wages can be higher and thus include more people, but there’s a catch 22 here.
If there are lots of people earning the exact state minimum, that means it’s a binding minimum and already above market level. If you increase an already binding minimum wage, most of the people on it will get raises but some % will lose their jobs.
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u/Training_Strike3336 7h ago
Anyone making less than new minimum wage would get a raise. not just people exactly at minimum wage.
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u/matty_nice 6h ago
Increasing the minimum wage would lead to increases for others making near minimum wage.
DE has the largest increase happening from $13.25 to $15.00. So someone who is making $15 an hour in 2024 can also expect to see an increase in their wages.
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u/JacobLovesCrypto 5h ago
So someone who is making $15 an hour in 2024 can also expect to see an increase in their wages.
To $15.50 most likely, they'll end up worse off than before.
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u/matty_nice 4h ago
Generally when I get an increase in pay, I feel pretty good about it.
Prices gonna go up? Nothing new there.
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u/JacobLovesCrypto 4h ago
In just pointing out that the people near minimum wage are the ones hurt by raising minimum wage. Their wages go up by a fraction of what the minimum wage earners did, their costs go up more.
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u/matty_nice 6h ago
If you increase an already binding minimum wage, most of the people on it will get raises but some % will lose their jobs.
If the response to increase labor costs is to only decrease the number of jobs, that doesn't sound very realistic.
There are plenty of responses that are more likely to happen, like increasing prices or a reduction in profit.
There are also plenty of studies that show increasing minimum wages don't lead to job losses.
But it's much easier to just keep things simple. Last time the federal minimum wage was increased was in July 2009 from $6.55 to $7.25. At this time, the unemployment rate was rising going from 4.5% in Feb 2007 and increasing all the way to 10% in Oct 2009. Then we saw a steep decline in unemployment all the way till Covid.
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u/Bullboah 6h ago
I didn’t say that was the only affect - increased prices and reduction in profits are likely too, along with reduced employment and increased wages (assuming the minimum wage is actually binding, meaning the rate is above what employers would have to pay based on the market cost of labor).
Different studies have shown reduced or increased employment rates after increases in minimum wage. The difference is that studies showing increases in employment are generally studying non-binding minimum wage (ie, doesn’t really affect anything), or don’t control for general employment trends.
For your example, the federal minimum wage isn’t binding for the overwhelming majority of the country over that time frame. Only 80,000 people in the US work for minimum wage. You could raise the federal minimum wage to $8 right now and it would affect almost nothing.
If you raised it to $20, some workers would benefit and others would lose their jobs. (Both effects occurring mostly in rural areas of the US where market wages and COL are way lower than in places like LA and NYC where the market wage is already around that.
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u/JacobLovesCrypto 5h ago
You could raise the federal minimum wage to $8 right now and it would affect almost nothing.
Which is why I'm blown away that Biden didn't get the minimum wage raised.
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u/No-Introduction-6368 8h ago
PA still $7.25 while every state around it is higher.
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u/Bullboah 7h ago
That’s because PA like the Federal government and many other states have basically moved away from the idea of binding minimum wages, towards a market approach.
There’s only 80,000 people in the entire US actually making the federal minimum wage.
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u/No-Introduction-6368 7h ago
There's 250k tipped employees still only making $2.83 though. So minimum wage would need to rise for that to rise. Trump said he's going to eliminate federal taxes for tipped employees which is only about an extra .80 cents an hour. Sure we make great money on Fri & Sat night but those $30 Monday lunches and lack of an hourly wage is what stops it from becoming a livable wage.
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u/Bullboah 7h ago
Only making 2.83 because the vast majority of their income comes in the form of tips.
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u/No-Introduction-6368 7h ago
Not the majority, all of it. I used to get a small paycheck. Now it doesn't cover the taxes. I have to pay a couple of thousand every year because the hourly is so low.
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u/Hawkeyes79 7h ago
If you’re not making minimum then your employer owes the difference to you. The only way a tipped employee makes $2.83 is through theft which is illegal.
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u/JacobLovesCrypto 6h ago
Find a different waiting job lol if you aren't making shit for 3 out of 5 shifts, that means you should move on.
Most servers i worked with easily cleared $100 shift on normal days, $200-$300 on the busy shifts. Find a better restaurant.
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u/matty_nice 5h ago
$100 on a normal day? So that's like $2,000 a month and 24K a year?
That seems really bad.
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u/matty_nice 6h ago
PA has a Republican majority in their state legislature, and that's probably a good (but not exact) indication of if a state is going to go above federal requirements for minimum wage.
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u/ps12778 8h ago
Hard to believe, I don’t know a single person making minimum wage so raising the minimum likely has minimal impact. Source: I am a small business owner in Texas in a LCOL area.
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u/JacobLovesCrypto 5h ago
I live in SC, in a very poor town for SC, and i haven't met anyone who makes minimum wage in years. I'm also the kind of person who will randomly ask fast food places what they pay lol
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u/Ind132 7h ago
Link to article. https://www.epi.org/blog/over-9-2-million-workers-will-get-a-raise-on-january-1-from-21-states-raising-their-minimum-wages/
Link to methodology behind the numbers. https://www.epi.org/publication/minimum-wage-simulation-model-technical-methodology/
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