WHY IT MATTERS: Minimum wage

Posted at 8:09 AM, Sep 21, 2016


Modest income growth for most Americans, strikes by fast-food workers, and the rapid growth of low-paying jobs at the same time middle-income work shrinks have combined to make the minimum wage a top economic issue for the 2016 campaign. Millions could benefit: Raising the federal minimum wage from $7.25 an hour to $12 would lift pay for 35 million workers, or 1 in 4 employees nationwide, according to the liberal Economic Policy Institute. But it would also boost costs for employers and may slow hiring. And it could lead to higher prices at clothing stores and restaurants and for other services.



Both candidates have struggled to articulate their positions. Hillary Clinton says she supports raising the minimum wage to $12 an hour, rather than the $15 supported by advocates for low-income workers and by the Democratic Party's platform. But she also supports state and local efforts to push it higher than $12.

Donald Trump is harder to pin down. Last fall he opposed any increase in the minimum, saying that overall wages were too high in the U.S. In July he said the minimum wage should be $10, but added that states should "really call the shots."



Income for the typical household has fallen 2.4 percent since 1999, even after a big gain in 2015. That has elevated the issue of wage growth over other economic concerns, particularly as the unemployment rate has fallen back to pre-Great Recession levels.

And low-wage industries are increasingly where the jobs are. The three occupations with the highest employment in 2015 were, in order, retail salespeople, cashiers and fast-food workers. Together they accounted for 11.3 million jobs, or 8 percent of the nation's total.

They are also growing quickly. Of the 10 occupations that the Labor Department projects will produce the most jobs in the coming decade, five pay a median wage of less than $12 an hour.

Meanwhile, according to Georgetown University's Center on Education and the Workforce, in 2015 the U.S. still had fewer middle-income jobs than it did before the recession. That reflects what economists call the "hollowing out" of the workforce, as traditional mid-level positions such as office administrators, mail clerks, and factory production workers are cut in recessions and never fully recover their previous levels of employment. Higher-paying and lower-paying jobs, meantime, have both surpassed their pre-recession levels.

Contrary to popular myth, low-wage jobs aren't dominated by teenagers earning extra spending money. About half of fast-food workers are 25 or over. And one-quarter have children. That has probably been key to a willingness by fast-food workers to demand higher pay.

The push for a higher minimum has won considerable success at the state and local levels. Twenty-six states have lifted their minimums in the past two and a half years. California's will be $15 by 2022 and New York's will be $15 by July 2021.

A wage floor at that level makes even left-of-center economists nervous. It is double the current minimum, a much bigger jump than previous increases.

Most economic research suggests that modest increases cost few, if any, jobs. The Congressional Budget Office estimated that a $10.10 minimum could reduce total employment by 500,000, or just 0.3 percent of all jobs. The CBO also found it would lift 900,000 people out of poverty. Still, $15 an hour is uncharted territory, with little research on its effects.


This story is part of AP's "Why It Matters" series, which will examine three dozen issues at stake in the presidential election between now and Election Day. You can find them at

EDITOR'S NOTE - One in an AP series examining issues at stake in the presidential election and how they affect people