A Minimal Minimum Wage, Ctd

Daniel Gross cheers the hikes that just went into effect:

[S]tarting in 2014, the minimum wage will rise in a big chunk of America—in 13 states and four cities, to be exact. Let’s review. In New Jersey (population 8.9 million), a constitutional amendment approved in November bumps the stage minimum wage up to $8.25 an hour and stipulates that it should rise every wear with inflation. In New York State (population 19.95 million), the minimum wage is rising to $8.00. In Connecticut (population 3.6 million), the minimum wage is set to rise from $8.25 to $8.70 per hour. In Rhode Island (population 1 million), the minimum wage is going up to $8.00. In July, California (population 38 million) will increase the minimum wage to $9.00. In nine other states, where the minimum wage is indexed to inflation or the cost of living, the floor under salaries will also be rising by small amounts. These include places where lots of Americans live, like Florida, Ohio, Colorado, Washington, and Arizona.

Now, only a small minority of the American workforce works for the minimum wage. But these legislative acts are nonetheless important. They will force companies to pay some existing employees more – often significantly more. They’ll push companies to raise the wages of those earning just above the current minimum wage. Most importantly, they set a higher standard for businesses. In effect, these states are telling companies, large and small, that if they want to operate in certain very large jurisdictions, they will have to design their operations in such a way that allows for slightly more decent compensation.

Some wage-hike supporters remain unsatisfied:

None of the states that raised their minimum wages Wednesday pushed them as high as $10.10, a wage proposed last year by Senate Democrats and later supported by President Obama. Such a wage would have pulled more than half of the working poor out of poverty in 2011, according to a June study, though prices have risen slightly since then.

Meanwhile, Cato fellow Michael Tanner shakes his head:

Given the current level of the minimum wage, the result of a small increase probably would not be catastrophic. For example, a study by Michael Hicks of Ball State University looked at the impact of the July 2008 minimum-wage increase in the United States and concluded that a 10 percent increase in the minimum wage results in a roughly 0.19 percentage-point increase in unemployment, meaning the loss of about 160,000 jobs.

But it is also important to understand that an increase in the minimum wage would not be taking place in isolation. Many businesses are already having to absorb a de facto increase in the minimum wage because of Obamacare. In 2015, businesses with more than 50 employees will have to provide health insurance to their workers or pay a $2,000 – 3,000 penalty. For a midsize employer that doesn’t offer insurance today, that amounts to roughly a $1 per hour increase in a minimum-wage employee’s compensation. And even those employers that provide insurance today will find their per-employee costs increasing as Obamacare drives up their premiums and requires that they provide more comprehensive and expensive insurance than they do now. Increasing the minimum wage on top of this would almost certainly have a significant impact on employment.

Caroline Baum sees a natural experiment in the making:

One thing is certain: Academics of both political persuasions will be closely monitoring the results, adjusting the numbers and reporting their findings. It’s about time the 20-year old Krueger-Card study of the fast-food industry in New Jersey and Pennsylvania had some data competition.

Previous Dish on the minimum wage hereherehere, and here.