Some states hold elections for state and local offices in odd-numbered years, and this year was no exception. In addition, a total of 39 statewide ballot measures were certified for the 2021 ballot in nine states. Some localities had ballot measures as well, like Tucson, Arizona, where residents voted in favor of a $15 minimum wage initiative.
Proposition 206, which passed by a vote of 64.96 to 35.04 percent, increases the city’s minimum wage incrementally from $12.15 to $15 by January 1, 2025, and by the rate of inflation rounded to the nearest multiple of $0.05 every January thereafter. The initiative also established a Department of Labor Standards to receive complaints from employees, investigate employers, and educate workers about their rights under the initiative.
Tucson Fight for $15 was behind the initiative. The campaign manager said before the election: “It’s hard to convince people that raising their wages is a bad thing when they’re barely surviving. And even folks who aren’t in that situation understand the economy is rigged against poor folks. I think there’s overwhelming acceptance of that in Tucson, and this is going to be something we’re going to win by a healthy margin.”
Opponents of the measure, like Amber Smith, president and chief executive officer of Tucson Metro Chamber, argued: “The act would put Tucson businesses at a disadvantage, forcing them to pay higher wages than competitors elsewhere in our community—including some that could be located right across the street.”
It turns out that Tucson is not alone. Already in 2021, the minimum wage has increased in 25 states and Washington, D.C., due to wages being indexed to changes in cost-of-living or inflation, legislation scheduling specific increases, or citizen-initiated measures scheduling specific increases. The increases range from $0.08 per hour in Minnesota to $2.25 per hour in Virginia. No state yet has a $15 minimum wage (it is $15 only in Washington, D.C.), but several are on track to have one after a few more years of yearly increases.
After years of clamoring for a $15 minimum wage, however, some progressives are now saying that $15 is not enough.
In a Labor Day tweet, former secretary of labor Robert Reich proclaimed: “Today seems like a good time to remind you that if wages had kept pace with productivity gains over the last 50 years, the minimum wage would be $24 an hour. $15 is the floor, not the ceiling, of what working people deserve.”
Economist Dean Baker, writing at the progressive Center for Economic and Policy Research, recently broached the idea of a minimum wage of $26 an hour. He reasoned:
That may sound pretty crazy, but that’s roughly what the minimum wage would be today if it had kept pace with productivity growth since its value peaked in 1968. And, having the minimum wage track productivity growth is not a crazy idea. The national minimum wage did in fact keep pace with productivity growth for the first 30 years after a national minimum wage first came into existence in 1938.
Baker wants us to envision “what the country would look like if the lowest paying jobs, think of dishwashers or custodians, paid $26 an hour.” It “would mean someone who worked a 2000-hour year would have an annual income of $52,000.”
But even he acknowledges that “a minimum wage this high would almost certainly lead to large-scale unemployment, and that would be true even if it were phased in over five or six years.” The $26-an-hour figure “is useful as a thought experiment for envisioning what the world might look like today, but it would not be realistic as policy for local, state, or even national minimum wage without many other changes to the economy.”
And what changes to the economy is he talking about? Basically, the problem is that that “a disproportionate share of income goes to those at the top.”
Major media outlets—which are predominantly left-wing—favorably quoted Baker in their stories on Labor Day about the need for the federal government to increase its minimum wage, which has been at $7.25 an hour for the past 12 years.
There are three major problems with the media’s focus on the federal minimum wage. The first is that fewer than half the states use the federal minimum as a guide. Thirty states already have a minimum wage that is above the federal minimum. The second reason is that according to the Bureau of Labor Statistics, only about 5 percent of U.S. hourly-paid workers make the minimum wage. They tend to be people who are young, unmarried, unskilled, and uneducated who work part-time in the leisure and hospitality sectors of the economy. Finally, nowhere in the Constitution does it grant to the federal government the authority to set a minimum wage or to regulate wages in any way no matter what the poverty rate or the state of the economy.
The real issue, though, is the whole idea of a minimum wage in the first place. Does anyone “deserve” a minimum wage of $26 an hour, $24 an hour, $15 an hour, or even $7.25 an hour?
In a free society, there would be no government-mandated minimum, fair, or living wage. The rate of pay for every job would strictly be a matter for employers and employees to decide, just like both parties currently decide other pay questions. Just look at what the Department of Labor says in a Q&A about the Fair Labor Standards Act (FLSA):
Pay raises are generally a matter of agreement between an employer and employee (or the employee’s representative).
Extra pay for working weekends or nights is a matter of agreement between the employer and the employee (or the employee’s representative).
The FLSA does not require payment for time not worked, such as vacations, sick leave or holidays (Federal or otherwise). These benefits are matters of agreement between an employer and an employee (or the employee’s representative).
Severance pay is a matter of agreement between an employer and an employee (or the employee’s representative).
The FLSA has no requirement for double time pay. This is a matter of agreement between an employer and employee (or the employee’s representative).
So why isn’t the hourly rate of pay a matter of agreement between employer and employee? Only because the government has arbitrarily chosen to regulate it.