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Since 1938, when the minimum wage was first introduced (at a rate of $0.25 an hour), the federal minimum wage has increased 22 times. The minimum wage is the salary floor or the lowest possible rate that employers can pay employees.

The most recent update to the federal minimum wage was in 2009, when it was raised to $7.25 an hour. Currently, 29 states and the District of Columbia have a higher minimum wage than the federal rate. As of July 2019, 44 cities had also passed laws raising the minimum wage.

When the state and federal minimum wage are different amounts, employees are entitled to the higher rate of the two. The question is whether the federal minimum wage should be raised again - and if so, to what hourly rate?

Should the Minimum Wage Be Raised?

Opponents believe that increases to the minimum wage will place a burden on employers, especially small companies, resulting in slower growth and decreased levels of employment. Proponents of an increase in the rate say that the minimum wage has not kept up with inflation and that many minimum wage workers are impoverished.

People on both sides of the issue point to economic studies and data to back up their viewpoint. Many Americans, however, have already made up their minds on the issue: A 2019 CNBC survey showed that 60% of respondents favored raising the federal minimum wage to $15 per hour.

Here is a summary of the pros and cons of raising the minimum wage.

Why the Minimum Wage Should Be Raised

An increase in the minimum wage raises the standard of living for impoverished workers.

The minimum wage hasn't kept up with inflation. As a result, the pay of many workers, particularly those with families of three or more people, are now well below the poverty level.

Studies show graduated increases in the minimum wage have a low impact on unemployment.

Consumers would spend more money if they earned more money, meaning that an increase to the minimum wage would have positive effects on the economy.

Increasing the minimum wage could help reduce gender- and race-based income inequality.

Government expenses for social programs aimed at the poor would potentially be reduced. This might result in slightly lower taxes for other Americans.

Slightly more revenue for the government would be generated from payroll taxes for social security.

Why the Minimum Wage Should Not Be Raised

In companies with a fixed compensation budget, an increase to the minimum wage could result in layoffs or slower hiring.

Employers might hire fewer workers in entry-level jobs, which might make it harder for workers to begin their careers.

An increase to the minimum wage would provide an incentive for employers to invest in automated processes, technology, and machinery to increase productivity rather than human resources.

Raises the incentive for companies to outsource labor to countries where minimum wage rates are lower.

A higher minimum wage could result in an increase of the high school dropout rate.

Prices might be increased to offset higher labor costs.

For small companies, already stressed owner/operators might take on more responsibility.

Wages for higher paid workers might be suppressed, and salary increases might be lower for those not impacted by a higher minimum wage.

State and Local Initiatives to Raise Minimum Wage

Even though the federal minimum wage hasn't increased since 2009, the majority of states have a higher minimum wage than required by the federal government. In addition, some local municipalities have initiated minimum wage increases for their location. For instance, San Francisco's minimum wage is higher than the state of California's minimum wage. (And, in turn, California's minimum wage is higher than the federal minimum wage).

Twenty-two states and the District of Columbia increased their minimum wage during 2017, mostly due to previously passed legislation.

In 2018, the highest state minimum wage was $11.50/hour, in Washington state, followed by Massachusetts and California at $11/hour. Many cities also increased the minimum wage rate as well - as of Jan. 1, 2018, it was $14/hour in Seattle, Washington (or $11.50/hour, plus at least $2.50/hour in tips and benefits) and $15/hour in Sunnyvale, California, for instance.

The Bottom Line

The Federal Minimum Wage is $7.25 per Hour: It was last raised in 2009.

Many States and Localities Set a Higher Minimum Than the Federal Mandate: As of 2019, 29 states and 44 cities have a higher minimum wage.

A Recent Survey Showed That Many Americans Favor an Increase: 60% want a $15 per hour minimum wage, according to a CNBC poll.

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Since 1938, when the minimum wage was first introduced (at a rate of $0.25 an hour), the federal minimum wage has increased 22 times. The minimum wage is the salary floor or the lowest possible rate that employers can pay employees.

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Charlise

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The minimum wage is specifically intended to take aim at the inherent imbalance in power between employers and low-wage workers that can push wages down to poverty levels. An appropriate wage floor set by Congress effectively substitutes for the bargaining power that low-wage workers lack. When low-end wages rise, poverty and inequality are reduced. But that doesn't mean the minimum wage is a government program to provide welfare, as critics sometimes imply in an attempt to link it to unpopular policies. An hourly minimum of $10.10, for example, as Democrats have proposed, would reduce the number of people living in poverty by 4.6 million, according to widely accepted research, without requiring the government to tax, borrow or spend.

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AVG. WAGE OF PRODUCTION WORKERS

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The actual minimum wage,

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IS THERE AN ALTERNATIVE? No. Other programs, including food stamps, Medicaid and the earned-income tax credit, also increase the meager resources of low-wage workers, but they do not provide bargaining power to claim a better wage. In fact, they can drive wages down, because employers who pay poorly factor the government assistance into their wage scales. This is especially true of the earned-income tax credit, a taxpayer-provided wage subsidy that helps lift the income of working families above the poverty line.

Conservatives often call for increases to the E.I.T.C. instead of a higher minimum wage, saying that a higher minimum acts as an unfair and unwise tax on low-wage employers. That's a stretch, especially in light of rising corporate profits even as pay has dwindled. It also ignores how the tax credit increases the supply of low-wage labor by encouraging more people to work, holding down the cost of labor for employers. By one estimate, increasing the tax credit by 10 percent reduces the wages of high-school educated workers by 2 percent.

There are good reasons to expand the tax credit for childless workers, as President Obama recently proposed. It is a successful antipoverty program and a capstone in the conservative agenda to emphasize work over welfare. But an expanded E.I.T.C. is no reason to stint on raising the minimum wage - just the opposite. A higher minimum wage could help offset the wage-depressing effect of a bolstered E.I.T.C., and would ensure that both taxpayers and employers do their part to make work pay.

HOW HIGH SHOULD IT BE? There's no perfect way to set the minimum wage, but the most important benchmarks - purchasing power, wage growth and productivity growth - demonstrate that the current $7.25 an hour is far too low. They also show that the proposed increase to $10.10 by 2016 is too modest.

The peak year for the minimum wage was 1968, when its purchasing power was nearly $9.40 in 2013 dollars, as shown in the accompanying chart. Since then, the erosion caused by inflation has obviously overwhelmed the increases by Congress. Even a boost to $10.10 an hour by 2016 (also adjusted to 2013 dollars) would lift the minimum to just above its real value in 1968. So while it is better than no increase, it is hardly a raise.

The situation is worse when the minimum wage is compared with the average wages of typical American workers, the ones with production and nonsupervisory jobs in the private sector. From the mid-1960s to the early 1980s, when one full-time, full-year minimum wage job could keep a family of two above the poverty line, the minimum equaled about half of the average wage. Today, it has fallen to one-third; to restore it to half would require nearly $11 an hour, a better goal than $10.10.

The problem is that the average wage, recently $20.39 an hour, has also stagnated over the past several decades, despite higher overall education levels for typical workers and despite big increases in labor productivity. People are working harder and churning out more goods and services, but there's no sign of that in their paychecks. If the average wage had kept pace with those productivity gains, it would be about $36 an hour today, and the minimum wage, at half the average, would be about $18.

That is not to suggest that the hourly minimum wage could be catapulted from $7.25 to $18. A minimum of $18 would be untenable with the average hovering in the low $20s. But it does confirm that impersonal market forces are not the only, or even the primary, reason for widespread wage stagnation. Flawed policies and changing corporate norms are also to blame, because they have allowed the benefits of productivity gains to flow increasingly to profits, shareholder returns and executive pay, instead of workers' wages.

DOES IT KILL JOBS? The minimum wage is one of the most thoroughly researched issues in economics. Studies in the last 20 years have been especially informative, as economists have been able to compare states that raised the wage above the federal level with those that did not.

The weight of the evidence shows that increases in the minimum wage have lifted pay without hurting employment, a point that was driven home in a recent letter to Mr. Obama and congressional leaders, signed by more than 600 economists, among them Nobel laureates and past presidents of the American Economic Association.

That economic conclusion dovetails with a recent comprehensive study, which found that minimum wage increases resulted in "strong earnings effects" - that is, higher pay - "and no employment effects" - that is, zero job loss.

Evidence, however, does not stop conservatives from making the argument that by raising the cost of labor, a higher minimum wage will hurt businesses, leading them to cut jobs and harming the low-wage workers it is intended to help. Alternatively, they argue it will hurt consumers by pushing up prices precipitously. Those arguments are simplistic. Research and experience show that employers do not automatically cope with a higher minimum wage by laying off workers or not hiring new ones. Instead, they pay up out of savings from reduced labor turnover, by slower wage increases higher up the scale, modest price increases or other adjustments.

Which brings the debate over raising the minimum wage full circle. The real argument against it is political, not economic. Republican opposition will likely keep any future increase in the minimum wage below a level that would constitute a firm wage floor, though an increase to $10.10 an hour would help tens of millions of workers. It also would help the economy by supporting consumer spending that in turn supports job growth. It is not a cure-all; it is not bold or innovative. But it is on the legislative agenda, and it deserves to pass.

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Opinion | The Case for a Higher Minimum Wage

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The minimum wage is specifically intended to take aim at the inherent imbalance in power between employers and low-wage workers that can push wages down to poverty levels. An appropriate wage floor set by Congress effectively substitutes for the bargaining power that low-wage workers lack. When low-end wages rise, poverty and inequality are reduced.

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Is Growth Desirable? What Does Economic Growth Mean for Average Americans?

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Is Growth Desirable? What Does Economic Growth Mean for Average Americans?

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U.S. gross domestic product grew by 4.1 percent in the second quarter this year (2018), according to the Commerce Department's initial estimated.
Draw the graph to illustrate an economic growth in the US economy.

Class discussion of answers

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What the strong economic growth means for average Americans

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Will US Economy Slow in 2019? What Would be the Top Economic Issues? 

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Will US Economy Slow in 2019? What Would be the Top Economic Issues? 

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David Wessel, senior fellow and director of the Hutchins Center on Fiscal and Monetary Policy, discusses the top economic issues facing the United States in 2019.
Formulate an economic prediction for the US economy in 2019.
Class discussion of answers.

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David Wessel, senior fellow and director of the Hutchins Center on Fiscal and Monetary Policy, discusses the top economic issues facing the United States in the upcoming year. Molly Reynolds, senior fellow in Governance Studies, offers her analysis of issues facing the new Congress.

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Robi

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After community backlash, Amazon has decided not to move forward with its plan to open a headquarters in Long Island City, Queens. Here's a look at what happened. Credit Credit... Hiroko Masuike/The New York Times

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Amazon on Thursday canceled its plans to build an expansive corporate campus in New York City after facing an unexpectedly fierce backlash from lawmakers, progressive activists and union leaders, who contended that a tech giant did not deserve nearly $3 billion in government incentives.

The decision was an abrupt turnabout by Amazon after a much-publicized search for a second headquarters, which had ended with its announcement in November that it would open two new sites - one in Queens, with more than 25,000 jobs, and another in Virginia.

Amazon's retreat was a blow to Gov. Andrew M. Cuomo and Mayor Bill de Blasio, damaging their effort to further diversify the city's economy by making it an inviting location for the technology industry.

The agreement to lure Amazon to Long Island City, Queens, had stirred intense debate in New York about the use of public subsidies to entice wealthy companies, the rising cost of living in gentrifying neighborhoods, and the city's very identity.

"A number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward," Amazon said in a statement.

The company made its decision late Wednesday, after growing increasingly concerned that the backlash in New York showed no sign of abating and was tarnishing its image beyond the city, according to two people with knowledge of the discussions inside the company.

In recent days, Mr. de Blasio had tried to reach Jeff Bezos, Amazon's chief executive, according to one official. But Mr. Bezos did not speak with him, nor with Mr. Cuomo.
[What you need to know to start the day: Get New York Today in your inbox.]
The company's decision was at least a short-term win for insurgent progressive politicians led by Representative Alexandria Ocasio-Cortez, whose upset victory last year occurred in the western corner of Queens where Amazon had planned its site.

Her race galvanized the party's left flank, which mobilized against the deal, helped swing New York's Legislature into Democratic hands, and struck fear in the hearts of some local politicians.

On Thursday, Ms. Ocasio-Cortez seemed to revel in Amazon's decision, writing on Twitter that "anything is possible."

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Anti-Amazon protesters before a New York City Council hearing in January. The deal to build a sprawling Amazon campus in Queens had also run into opposition from some local lawmakers. Credit... Hiroko Masuike/The New York Times

Not only progressive activists took issue with the Amazon deal: Michael R. Bloomberg, who championed New York City as a technology hub while mayor, questioned the incentive package earlier this month.

The company also had its supporters - in the city's business community, among some unions and within nearby public housing, where some residents were hopeful that the project would bring jobs. A pair of polls showed broad support around the city and state.

But in the end, it was not enough to persuade the company to ride out the torrent of negative attention.

Amazon did not inform the governor or the mayor of its decision to pull out until Thursday morning, shortly before the company posted its announcement online.

Mr. Cuomo and Mr. de Blasio reacted in starkly different ways. The governor blamed the newly emboldened Democrats who now control the State Senate for derailing the project.

"A small group of politicians put their own narrow political interests above their community - which poll after poll showed overwhelmingly supported bringing Amazon to Long Island City - the state's economic future and the best interests of the people of this state," the governor said in a statement.

For his part, Mr. de Blasio turned on the company after having steadfastly backed the deal.

"We gave Amazon the opportunity to be a good neighbor and do business in the greatest city in the world," Mr. de Blasio said. "Instead of working with the community, Amazon threw away that opportunity."

The mayor and the governor, who only rarely find common cause, met Monday in Albany and discussed how to save the deal, which had appeared increasingly imperiled, according to a person familiar with the conversations. After the meeting, Mr. de Blasio spoke to a senior Amazon executive by phone and was told that the company remained committed to New York, the person said.

Both the mayor's and the governor's offices reassured Amazon executives that, despite the vocal criticism, the deal they had negotiated would be approved. But the company appeared upset at even a moderate level of resistance, said the person, who, like many of the people describing private conversations at the company and with elected officials, did so on the condition of anonymity.

A decisive moment appeared to come when the Senate Democrats selected Senator Michael Gianaris of Queens for a state board with the power to veto the deal. Mr. Gianaris had once supported the efforts to bring Amazon to New York, but became a vocal critic after learning the details of the plan.

Over time, opposition to Amazon had spread from the specifics of the deal to the company's corporate practices. Elected officials and activists in New York drew attention to the company's anti-union stance and its work with federal immigration officials - positions unpopular with Democratic leaders across the country.

Amazon executives felt they had been open to answering questions, submitting to two City Council hearings, with another planned for later this month. They had begun working on a hiring plan, people with knowledge of the planning said, and were encouraged by public support in two polls of voters, conducted by Quinnipiac University and Siena College. While the subsidies were less popular, the deal to bring Amazon, and tens of thousands of jobs, was welcomed by a variety of groups.

On Wednesday, Mr. Cuomo had even brokered a meeting between Amazon executives and union leaders who had been resistant to the deal - including from the Retail, Wholesale and Department Store union and the Teamsters.

"Amazon and the governor and everybody agreed yesterday on a way to move forward," said Stuart Appelbaum of the retail union, who was part of the meeting. "Shame on them. The arrogance of saying 'do it my way or not at all."'

Some unions supported the deal, and even those opposed had appeared willing to work with Amazon if the company agreed to not work against the unionization of its employees in New York. An Amazon representative, during one council hearing, pointedly said the company would not agree to such terms.
[Column: For once, Amazon loses a popularity contest.]
Kathryn S. Wylde, the chief executive of the Partnership for New York City, an influential business group, said the reception Amazon had received sent a "pretty bad message to the job creators" of the city and the world.

"How can anyone be surprised?" Ms. Wylde said. "We competed successfully, made a deal and spent the last three months trashing our new partner."

When Amazon announced plans for a second headquarters in September 2017, it promised 50,000 high-paying jobs and billions in investment for a community that would be coequal to its home in Seattle. The voracious company, whose ambitions outgrew the number of people it could hire in the Pacific Northwest, set off a nationwide frenzy, with more than 200 cities making bids.

Amazon decided last fall that no one city could provide the number of tech workers it needed and split the headquarters in two.

The company has long been willing to take short-term pain in exchange for maintaining long-term leverage. In Seattle, Amazon's relationship with officials soured as it grew to become the city's dominant employer. Last year, when the Seattle City Council proposed taxing large employers to pay for homeless services and affordable housing, Amazon took a rare public stance and threatened to halt its expansion. In the end, the city retreated and got rid of even a pared back version of the tax it had adopted.

The Seattle relationship looms over Amazon's growth plans. As much as Amazon wanted New York's talent, it was not worth facing years of opposition on broad swaths of issues.

Instead, Amazon will grow across its tech hubs, which include large outposts in cities like Boston, Austin, Tex., and Vancouver, British Columbia, as well as smaller ones in Pittsburgh and Detroit. It will lose the value it has said it finds in having employees in a centralized corporate campus, but will maintain flexibility to grow where and when it wants.

Even in New York, where Amazon already has 5,000 workers, about half at a distribution center on Staten Island, the company still plans to add more jobs, particularly in advertising, fashion and web services.

Mr. Gianaris said the collapse of the deal in Queens revealed the company's unwillingness to work with the community it had wanted to join.

"Like a petulant child, Amazon insists on getting its way or takes its ball and leaves," said Mr. Gianaris, whose district includes Long Island City. "The only thing that happened here is that a community that was going to be profoundly affected by their presence started asking questions.

"Even by their own words," he added, pointing to the company's statement on the pullout, "Amazon admits they will grow their presence in New York without their promised subsidies. So what was all this really about?"

While small protests greeted the company after its initial announcement in November, the first inkling that opposition had taken hold among the city's Democratic politicians came during a hostile City Council hearing the next month. Protesters filled the seats, unfurled banners and chanted against the company. Not a single council member spoke up in defense of the deal or the company.

Company executives fared no better at their second appearance, in January, though supporters, lobbyists and consultants were better prepared. Unions supporting the deal, including the powerful 32BJ Service Employees International Union and the Building and Construction Trades Council of Greater New York, staged a rally outside City Hall immediately after one held by opponents.
[Amazon had a 'productive meeting' with union leaders, just a day before they pulled out.]
Still, the company did not hire a single New Yorker as an employee to represent it in discussions with local groups. Its main representatives traveled between Washington and Manhattan, and only one had moved into an apartment to work with community members and foster support.

Gianna Cerbone, who owns a restaurant several blocks from what would have been the main Amazon campus, said the demise of the deal was a major blow to people who need jobs and local businesses that would have benefited.

"I'm really upset because I don't think they realized what they did," she said of the elected officials who had opposed the plan. "And they're proud of it? They think they did something lovely? They wanted the political gain, they should have done it in a different way. They get put into office for us, not to work for themselves."

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Amazon Pulls Out of Planned New York City Headquarters

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What you need to know to start the day: Get New York Today in your inbox. ] Amazon on Thursday canceled its plans to build an expansive corporate campus in New York City after facing an unexpectedly fierce backlash from lawmakers, progressive activists and union leaders, who contended that a tech giant did not deserve nearly $3 billion in government incentives.