Last week, the Congressional Budget Office released its analysis of what President Joe Biden’s proposal of a $15-an-hour minimum wage — up from the current national minimum of $7.25 — would do to the nation’s economy. It would raise 900,000 people out of poverty while at the same time putting 1.4 million people out of work.
That’s not a good trade-off.
A national minimum wage of $15 an hour sounds excellent in theory, but in practice it won’t work.
Let’s look at West Virginia, which has its own minimum wage that’s higher than what the federal government requires. It’s one of 29 states that have their own wage floors.
Compared with its neighbors, West Virginia is in the middle when it comes to state-mandated minimum wages. Kentucky and Pennsylvania use the federal minimum wage, but West Virginia and the other bordering states have set their own. West Virginia’s minimum wage has been $8.75 since 2016. Ohio’s minimum wage changes each year and now stands at $8.80. Virginia used the federal minimum wage until this year, when it raised its minimum wage to $9.50. Maryland set its minimum wage at $11.75.
Some states allow local jurisdictions to set minimum wages of their own. Montgomery County, Maryland, for example, has a three-tiered minimum wage based on the number of people who are employed at an establishment. It tops out at $14 an hour for the larger employers and increases to $15 an hour on July 1. No local jurisdictions in West Virginia, Ohio or Kentucky have their own wage floors.
Doubling the minimum wage would affect more than the lowest earners. According to the federal Bureau of Labor Statistics, the median wage in West Virginia in 2019 — the point at which half the earners are paid more and half are paid less — was $16.31. Median hourly wages for at least six employment classifications were lower than $15: food preparation, personal care, healthcare support, sales, building and grounds maintenance and transportation.
Those six fields employed about 37% of the state’s work force. Bumping the minimum wage to $15 would result in significant pay increases for many of those workers, but it also would mean significant increases in costs for their employers.
If we are to have a minimum wage, we’re close to the best situation now. It’s good that Congress sets a floor that applies nationwide, with states being able to add to it to match their local needs. Congress should set a minimum wage at a level appropriate for the least affluent regions and let the more affluent states set higher minimums — the same as now. Even then, there are problems within states. Here in the Mountain State, Morgantown and Welch might as well be in two different worlds when it comes to minimum wage. Those disparities are best addressed at the state level rather than at the federal.
A $15 federally mandated minimum wage is too high — too high for West Virginia, too high for Appalachia in general and too high for the nation. Too many small businesses couldn’t afford it in a time when they are already struggling to keep up with the Walmarts and Amazons of the world.
There might be a need for a slight increase in the federal minimum wage. It’s been $7.25 since July 2009. Adjusted for inflation, that would be $8.77 today, or 2 cents more than what West Virginia requires now. That could be a good compromise. Just as West Virginia showed the nation how to distribute the coronavirus vaccine, it could show the nation an effective and responsible level for a minimum wage.