This fall, Mainers will get to vote on whether to increase the state’s minimum wage which currently stands at $7.50/hour. Depending on how Mainers vote, the minimum wage could increase over a period of time to $12/hour in 2020. In cities and states around the nation, similar minimum wage increases are being debated and passed. Today, the legislature of the largest state in the nation, California, passed a law that will raise California’s minimum wage to $15/hour over the next six years.
Those fighting to raise the minimum wage, including the Maine People’s Alliance, focus on economic fairness arguments. “It’s not right that a single mother of two can work full time and still not make ends meet for her family,” says the Maine People’s Alliance. This argument certainly seems to be resonating around the country as states and cities raise the minimum wage.
Opponents to minimum wage increases often argue that increasing wages will hurt workers because employers will hire fewer people if they have to pay them more and employers will have to lay off workers because of increased labor costs. Economists have debated this point for decades. Studies have shown that minimum wage increases do not harm workers and businesses like opponents claim. When employers face mandates to increase wages, they can often absorb increased labor costs because of increased productivity from workers who are motivated to work longer and harder due to higher wages. Increased wages also tend to decrease employee turnover which is another boost to productivity. Furthermore, when the minimum wage increases, low-wage workers can afford to pay more for goods and services which means that employers can increase prices in order to bring in the additional money needed to pay the increased minimum wage.
With California passing a large increase to its minimum wage, economists will have even more data to study. If the wage increase does not hurt California’s workers or economy, the arguments of opponents to minimum wage increases in other parts of the country will be even less persuasive. So, stay tuned. California’s decision to increase the minimum wage to $15/hour could pave the way to a $15/hour minimum wage throughout the whole nation.