Commentary By Jared Bernstein
Washington Post, April 30, 2015
I’ve got good news and bad news. The good news is that there’s a new proposal coming out today to raise the federal minimum wage to $12.00 by 2020 ... The bad news is that the opponents of the increase, with little regard for the evidence, will soon be trotting out the same tired arguments about how the policy kills jobs and hurts the people it’s intended to help. ...
But there are many other ways that these wage increases get absorbed, such as through prices, profits and productivity. There’s typically a small pass-through to prices, and some of the higher labor costs come out of profits.
A particularly interesting absorption mechanism is more efficient production from better-paid workers, leading to lower turnover, fewer vacancies, and a more highly motivated staff. That’s one of the reasons a coalition of businesses that employ low-wage workers support this proposal. ...
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