$15/hr minimum wage, 3 of 3

A $15/hour wage is both a good and bad idea. It’s also neither.

Looking at the sources of the previous two installments, you might notice two things: both sides quote the Congressional Budget Office. The “good idea” side quotes that one million people will be lifted out of poverty. The “bad idea” side says 1.4 million jobs would be destroyed. [Source]

But those aren’t mutually contradictory statements. We could face a situation where 1.4 million of the lowest-wage jobs *are* destroyed, rendering many people permanently jobless, and yet one million other people get lifted out of poverty. Or the two could pair up nicely, and those who manage to keep their $15/hour jobs offset the impact of those who’ve been made “redundant.”

The problem with predicting the future is that, well, it’s hard. We might be right about one thing, but the solution to that problem ends up creating a new problem.

Also, the evidence that Henry Ford's move to a $5/day wage in 1914 could be applicable today is specious. He benefited because his wages allowed him to get the best employees in the labor market.

"Lost in the headlines was the fact that the pay increase was not a raise per se, it was a profit sharing plan. If you made $2.30 a day under the old pay schedule, for example, you still made that wage under the Five-Dollar plan. But if you met all of the company’s requirements, Ford gave you a bonus of $2.70.[Source]

Plus, a $15/hour wage set for the entire economy wouldn't produce the same effects across the entire economy.

The notion of a high wage land of prosperity for everyone is a wonderful idea. But raising the minimum wage is not likely to get us there. It’s more likely that a $15/hour minimum wage will benefit a tiny minority of American workers, while still further disadvantaging even more. It’s also quite likely that we can’t predict the second- or third-order effects.

Only hindsight is 20/20. We shouldn’t act like 2021 is the same.