Should We Raise the Minimum Wage?
Minimum wage is a hot topic, one that Arindrajit Dube, UMass Amherst professor of economics, has been pondering for nearly two decades. His research has contributed to a revolution in thinking about the consequences of raising the minimum wage.
In March, the UMass Amherst Alumni Association hosted a public online discussion with Dube called “Make or Break: The Economic Effects of the Minimum Wage.” The forum was moderated by Robert Nakosteen, professor of operations and information management at the Isenberg School of Management.
In sum, Dube’s research indicates that raising the federal minimum wage is good economic policy that would benefit low-wage workers and help to reduce income inequality. His research has led to growing recognition among economists that raising the minimum wage has not led to job loss, as most experts had warned in the past. In fact, Dube says, “The impact on the number of jobs has been quite small.”
Dube provided background on minimum wage in the US. It was first established in 1938 at $.25 per hour and covered 43% of the workforce. Today, 29 states plus Washington, DC, have a minimum wage that exceeds the federal minimum of $7.25 per hour. In Massachusetts, the minimum wage is $13.50 per hour. The federal minimum wage lags well behind cost of living increases; it was last raised back in 2009.
Dube’s research found that raising the minimum wage decreases employee turnover. He also noted that low-wage workers tend to pay down their debt when the minimum wage increases. He reported there is no evidence that employers replace low-wage workers with automation when minimum wages increase. Furthermore, when the minimum wage is raised, workers’ families tend to rely less on public assistance.
Dube’s expertise was in great demand recently as Congress considered—and then rejected—adding gradual increases to the federal minimum wage to the 2021 COVID-19 relief package. He was quoted in the New York Times and the Washington Post, profiled in Bloomberg’s Businessweek, and appeared on PBS NewsHour, Chris Hayes’ podcast, and other venues.
Given that Dube’s research indicates that an increase in the federal minimum wage pegged either to median wage or to the rate of inflation would have many positive economic benefits, why haven’t more politicians embraced it? One reason, Dube said, is that they prefer to pass such legislation at the state and local level. “It does give politicians the ability to say they did something,” he said.
As the minimum wage debate moves to state and local governments and more workers protest for a livable wage, Dube’s ongoing research will continue to matter greatly to millions of Americans.