Meme Verifying: The Cost Of Increasing The Minimum Wage

Toy Story Minimum Wage Increase MemeNext week Alberta will see its minimum wage increase from $11.20 to $12.20. Since last fall, that rate has started a climb towards to $15/hour minimum wage, which will be effective as of October 1, 2018. This annual increase has resulted in a predictable flow of anti-minimum wage increase memes in my September Facebook feed.

The dumbest one I saw is below; it’s too stupid too lead with. Instead, I went with one that’s a bit more common and a bit more possible: That increasing the minimum wage leads to unemployment. So does it?

Well, it depends. This article over JournalistResource.org does a great job at examining the many studies on this topic and states, “The research generally supports the idea that raising the minimum wage would have varying effects across U.S. regions and industries, even if on the whole it doesn’t produce massive negative effects.”

One of the many pieces of literatures that it highlights is the 2014 book, What Does the Minimum Wage Do? by Dale Belman of Michigan State University and Paul Wolfson of the Tuck School of Business at Dartmouth. It synthesizes some 200 papers and rules, “Evidence leads us to conclude that moderate increases in the minimum wage are a useful means of raising wages in the lower part of the wage distribution that has little or no effect on employment and hours.”

That being said, there is some evidence that an increase could hurt employment in areas and the article’s author comments that, “At the ground level, this all suggests that a small firm in a low-wage region might, for example, respond to an increase in the minimum wage by having the owner pick up more hours herself and cut back on an employee’s overtime hours.”

Anti-minimum wage increase memes also love to state that an increase in pay will lead to an increase in the cost of goods. Again, there is no definite “yes” or “no” response to this “fact.”

A 2015 study by Purdue University found that increasing the hourly wage of fast food workers to $15 an hour would increase food prices by 4.3 per cent. That’s not a huge amount but it is something.

However, that result is not what the city of Seattle is experiencing. In April 2015, it, like Alberta, started steadily increasing its minimum wage towards $15 an hour. One year later, the University of Washington took a look at whether or not this move had impacted prices and “the team’s report found ‘little or no evidence’ of price increases in Seattle relative to other areas.” Huh.

While the evidence isn’t 100 per cent clear cut, one thing that I do feel I can confidently say is that increasing the minimum wage, particularly gradually like Alberta is doing, isn’t going to cause prices to skyrocket or jobs to disappear en masse.

Minimum Wage Increase Meme

The whole point of this meme is that increasing the minimum wage would put people in a higher tax bracket, resulting in more money in the government’s pocket but less in yours as the cost of goods will increase while your take-home pay goes down since you’re paying higher taxes. But no intelligent person would advocate for a minimum wage that would send workers into the next tax bracket. And no one is advocating for a 1500 per cent wage increase, which is what’s happening in this meme’s scenario.

When it comes to increasing the minimum wage, there are a lot of misinformed memes out there but this one has to be the absolute worst.

 

 

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