Minimum Wage Mythbusters

laborr22ALL DATE: THE U.S.DEPARTMENT OF LABOR

MYTH: Raising the minimum wage will only benefit teens.

NOT TRUE: The typical minimum wage worker is not a high school student earning weekend pocket money. In fact, 88 percent of those who would benefit from a federal minimum wage increase are age 20 or older, and 55 percent are women.

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MYTH: Increasing the minimum wage will cause people to lose their jobs.

NOT TRUE: A review of 64 studies on minimum wage increases found no discernable effect on employment. Additionally, more than 600 economists, seven of them Nobel Prize winners in economics, have signed on to a letter in support of raising the minimum wage to $10.10 by 2016.

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MYTH: Small-business owners can’t afford to pay their workers more and therefore don’t support an increase in the minimum wage.

NOT TRUE: A June 2014 survey found that more than three out of five small-business owners support increasing the minimum wage to $10.10. Small-business owners believe that a higher minimum wage would benefit business in important ways: fifty-eight percent say raising the minimum wage would increase consumer purchasing power. Fifty-six percent say raising the minimum wage would help the economy. In addition, fifty-three percent agree that with a higher minimum wage, businesses would benefit from lower employee turnover, increased productivity and customer satisfaction.

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MYTH: Raising the federal tipped minimum wage ($2.13 per hour since 1991) would lead to restaurant job losses.

NOT TRUE: Employers in San Francisco must pay tipped workers the full minimum wage of $10.74 per hour—before tips. Yet, the San Francisco restaurant industry has experienced positive job growth over the past few years, according to the Bureau of Labor Statistics.

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MYTH: Raising the federal minimum wage won’t benefit workers in states where the hourly minimum rate is already higher than the federal minimum.

NOT TRUE: Only 23 states and the District of Columbia currently have a minimum wage higher than the federal minimum, meaning a majority of states have an hourly minimum rate at or below the federal minimum. Increasing the federal minimum wage will boost the earnings for some 28 million low-wage workers nationwide. That includes workers in those states already earning above the current federal minimum. A raise for minimum wage earners will put more money in more families’ pockets, which will be spent on goods and services, stimulating economic growth locally and nationally.

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MYTH: Restaurant servers don’t need to be paid the minimum wage, since they receive tips.

NOT TRUE: An employer can pay a tipped employee as little as $2.13 per hour in direct wages, but only if that amount plus tips equal at least the federal minimum wage and the worker retains all tips and customarily and regularly receives more than $30 a month in tips. Often, an employee’s tips combined with the employer’s direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage. When that occurs, the employer must make up the difference. Some states have minimum wage laws specific to tipped employees.

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MYTH: Only part-time workers are paid the minimum wage.

NOT TRUE: About 53 percent of all minimum-wage earners are full-time workers, and minimum-wage workers contributed 46 percent of their household’s wage and salary income in 2011. Moreover, more than 88 percent of those who would benefit from raising the federal minimum wage from $7.25 to $10.10 are working adults, and 55 percent are working women.

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MYTH: Increasing the minimum wage is bad for businesses.

NOT TRUE: Academic research has shown that higher wages sharply reduce employee turnover, which can reduce employment and training costs.

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MYTH: Increasing the minimum wage is bad for the economy.

NOT TRUE: Since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, GDP per capita (adjusted for inflation) has steadily increased, even when the minimum wage has been raised.

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MYTH: The federal minimum wage goes up automatically as prices increase.

NOT TRUE: Some states have enacted rules triggering automatic increases in their minimum wages to help them keep up with inflation; the federal minimum wage does not operate in the same manner. It should be adjusted automatically with inflation.

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MYTH: The federal minimum wage is higher today than it was when President Reagan took office.

NOT TRUE: While the federal minimum wage was only $3.35 per hour in 1981 and is currently $7.25 per hour in today’s dollars, the current federal minimum wage would need to be more than $8 per hour to equal its buying power in the early 1980s and more nearly $11 per hour to equal its buying power in the late 1960s.

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MYTH: Increasing the minimum wage lacks public support.

NOT TRUE: Raising the federal minimum wage is an issue with broad popular support. Polls conducted since February 2013, when President Obama first called on Congress to increase the minimum wage, have consistently shown that an overwhelming majority of Americans support an increase.

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MYTH: Increasing the minimum wage will result in job losses for newly hired and unskilled workers.

NOT TRUE: Minimum wage increases have little to no negative effect on employment, as shown in independent studies from economists across the country. Academic research also has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs.

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MYTH: The minimum wage stays the same if Congress doesn’t change it.

NOT TRUE: Congress sets the minimum wage, but it doesn’t keep pace with inflation. Because the cost of living is always rising, the value of a new minimum wage begins to fall from the moment it is set.

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