The beginning of 2021 marked the increase of the legal minimum wage in 20 states. Four additional states will increase their own wage floor later in the year. These policies (and analogous ordinances by several municipalities) are an achievement of an organized political movement, the “Fight for $15.”
Despite the use of $15 as a rallying cry, the actual number of the new minimum varies in these jurisdictions. In Florida, for example, the new minimum wage is only $8.65, although this is part of a phase-in of higher wages scheduled to reach $15 by 2026.
In some places, especially in municipalities in California in which the cost of living is high, the new minimum is above the target of $15. In the quintessential silicon-valley town of Mountain View, California, the new floor is $16.30.
The Thing to Know:
Critics of minimum wage increases maintain that such policies induce employers to lay off some of their manual laborers, for example by giving out more overtime to those who remain, by automating some of the work, by going out of business, or by moving to jurisdictions with lower wage floors.
Defenders of such increases reply that the increase in the minimum wage is a general social gain, because manual laborers have a higher propensity-to-consume than the more affluent do. They don’t sock it away into savings, they keep it in circulation by spending most or all of it, which has a stimulative impact on the economy.