According to the Bureau of Labor Statistics, among those paid by the hour, 1.6 million Americans earned the prevailing federal minimum wage of $7.25 per hour in 2012. (The data for 2013 hasn’t been released yet.) Of these, 484,000 are aged 16 to 19.
The federal minimum wage is $7.25 per hour, although many states and localities require a higher wage by law. SeaTac, the municipality that surrounds Seattle-Tacoma International Airport, now requires $15 per hour. Democrats want to raise the federal minimum wage to $10.10 per hour, an additional $2.85 per hour.
For a minimum-wage employee working 40 hours per week, that’s an additional $114 per week, before taxes.
With 1.6 million earning the federal minimum wage, averaging 35 hours per week, this would amount to $159.6 million in higher wages per week. That, times 52 weeks per year, amounts to about $8.2 billion. That may sound like a lot, but we have a $17 trillion economy.
In short, an America with a $10.10-per-hour minimum wage would look indistinguishable from the one we see today on the issue of income inequality, as well as the economic aspect that more conservatives focus on, opportunity for advancement. (Getting that first entry-level, minimum wage may get harder as each employee becomes more expensive to the employer.) The workers making minimum wage may very well appreciate the extra $85 to $114 per week, but it’s not going to have much of an impact on their purchasing power. Small companies on tight margins may find the $2.85-per-worker-per-hour cost more difficult to handle, or may raise prices. Of course, if prices go up . . . that will eat into the budgets of those minimum-wage workers pretty fast, won’t it?