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How does a $15 Federal Minimum Wage affect the American Economy?
Hunter Lundquist
Ottawa University

Abstract
The following bibliographic essay can be used to aide in the search and collection of
sources which relate to the question of what effects would be caused by an increase of the federal
American minimum wage to fifteen dollars. In 2016, the year of a presidential election, the
country and the candidates view the economy as one of the most important topics of discussion
regarding the nation and its advancement forward. As the world continues to evolve and smaller
countries develop, the United States looks to keep pace and stay atop the world as an economic
powerhouse. Among the proposed ideas to enhance Americas economy is the idea of increasing
the nations minimum wage, specifically to fifteen dollars. This bibliographic essay plans to
delve into the effects of such an increase and help its reader better understand the debate
revolving around this proposal made relevant by those running for the highest office in the
country. This paper contains articles that explain the effects of past minimum wage increases
across different cities in the United States, articles that view estimates of the effects caused by
this proposal, as well as articles which focus on economic theories and their findings regarding
the effects of an increase. The sources used throughout this essay are comprised of academic
journals or periodicals in most cases. These sources are discussed at great length throughout the
essay and are also referenced at the end of the paper for the readers ease of access to information
that is part of the essay. The sources used for this essay are comprised of advanced information

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written by scholars, but are used and presented in an understandable manner for the reader when
used in the paper.

Introduction
As the condition of the American economy as a whole continues to deteriorate, the
political giants facing off in the 2016 election look for any solution that can help those who are
struggling get back on their feet. The most common solution proposed today is the idea of a
minimum wage increase to fifteen dollars per hour across the country. This minimum wage
increase proposal is one that has many avid supporters as well as many who believe there is just
no way for the increase to work and keep the economy stable. One can reject the idea of the
increase helping the economy, but one can not refute the fact that the American economy is
falling behind the rest of the world and some change must be implemented to help stabilize. The
question of whether or not a fifteen dollars minimum wage is the answer to some of the nations
problems will hopefully be answered shortly.

Effects of Past Increases in Specific Cities

The first question one must ask when viewing a proposal to increase the minimum wage
is whether or not an increase of such magnitude has been put into law before and what were the
effects of such an increase. The article Is a $15 Minimum Wage Economically Feasible?
(Wicks-Lim 2016) delves into multiple parts of the minimum wage increase question including
past results. In this article, Wicks-Lim takes a look at the effects of Seattles recent ordinance
which calls for a progressive series of increases which began in 2013. According to her research,
in the first few months after the increase there was little job loss and the increase had little effect

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on the citys economy as a whole. The research she uses to support this point comes from another
article in Paget Sound Business Journal which will be discussed later. Later in this article, WicksLim concludes after multiple future estimates that prices of goods will inevitably go up in the
city as a result in the increase in the citys business payrolls. For example, a Big Mac from
McDonalds in the city will go from $4.00 to $5.40 over the course of a few years. This articles
intended audience is the general public whom are looking for information regarding a possible
increase making the article relevant for much of its possible readers. Wicks-Lims piece was
written in early 2016 which makes the information discussed as well as the resulting findings
current. The article contains little bias and all of its claims are backed up by facts from real world
events or research.
The article referenced by Wicks-Lim in the piece above is Apocalypse Not: $15 and the
cuts that never came (Stewart 2015) which can be found in the Paget Sound Business Journal. In
this specific article, Jeanine Stewart discusses the early six month effects of the minimum wage
raise in Seattle to eleven dollars for the time being. Newr the beginning of the article, Sanders
references a local restaurant entrepreneur, Tom Douglas, who holds the belief that such a
minimum wage increase would cause Seattle to lose almost a quarter of its downtown
restaurants. In her six month findings, Stewart finds that even more restaurants have applied for
permits than the year before and that restaurants in downtown Seattle have seen little effects on
their businesses. However, Douglas and other restaurant owners still fear that this minimum
wage increase will cause the loss of millions of dollars for the cities businesses. The article
discussed above shows little bias as it covers all sides of the story and is relevant in two or three
different ways to the area of research for this paper.

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In 2012, a trio of professors from the United States wrote the article, Are the Effects of
Minimum Wage Increases Always So Small? New Evidence From a Case Study of New York
(Burkhauser, Hansen, Sabia 2012) which discusses new findings regarding the effects of the
recent minimum wage increases in New York State. Over the entirety, the authors examine the
effects on 16-29 year olds without high school diplomas caused by the increase of the minimum
wage from $5.15 to $6.75 per hour in New York State. Their findings show that between 2004
and 2006, the employment of the low-skilled workers aged 16-29 fell by 20.2 to 21.8%. This
evidence refutes the findings of other professors in other parts of the nation who found that
minimum wage increases had little effect on the employment of their areas low skilled workers.
The article cited proves to be credible each of its three authors hold jobs in which they are
professors around the world at prestigious universities including San Diego State University,
Cornell University, and the University of Oregon . However, the piece may be slightly outdated
as it only views information from 2004 to 2006 and was written four years ago.
In March of 2016, Saul D. Hoffman wrote the article Are the Effects of Minimum Wage
Increases Always Small? A Reanalysis of Sabia, Burkhauser, and Hansen (Hoffman 2016)
which directly analyzes the findings of the article referenced in the paragraph before this. In the
article, Hoffman reexamines their findings by using a full Current Population Survey instead of
the smaller one that the trio of authors used. The Full CPS that Hoffman uses is the source of the
official US labor market statistics unlike the CPS the original authors used. Hoffman finds in his
article that the trio of authors used elasticities that were much too large for the information they
used and that any reasonable economist would have questions regarding their finding's accuracy.
In his conclusion, Hoffman states that in his reanalysis, he finds no evidence that supports the

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belief that there is a negative effect for the employment of young, less-educated workers in New
York State following the minimum wage increases. The article discussed above is written in
early 2016 which makes it up to date and contains information that can be difficult for the
general public to understand which makes its intended audience, scholars. The source is relevant
to the topic of research because it presents a reanalysis of previous findings regarding the effects
of low class employment caused by a minimum wage increase.

Effects of Increase on the Lower Income

The question of increasing minimum wages comes from the much simpler idea of social
equality in many ways. The article, Do Minimum Wages Fight Poverty? (Neumark and
Wascher 2002) discusses the effects of minimum wages and their potential increases on the
impoverished. Through their research of data from upwards of ten sources, the two authors found
that increasing minimum wages increase the probability that impoverished families escape
poverty and the probability non poor families become impoverished. In their conclusion, the
authors state the following On balance, minimum wages appear to slightly increase the
proportion of families that are poor, although this estimated net effect is insignificant. On the
other hand, we also find that minimum wages tend to boost the incomes of poor families that
remain below the poverty line. The article referenced above was written in 2002 for the
Economic Inquiry, but the article is credible as it is written by two professors for an academic
journal. In conclusion, this article is relevant to the topic of research because it provides
important information regarding how minimum wage increases can help or hurt the chances of
America shrinking the size of its impoverished.

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The article, Justice at Work: Minimum Wage Laws and Social Equality (Rogers 2014)
delves into minimum wage and its impact on social equality. The author finds that minimum
wage laws must be just and fair to workers in order for the economy to operate at its best level.
In all, the author is stating that minimum wage laws must be just for the economy to work
efficiently as a whole and he avoids answering whether or not an increase is needed to do so. The
article above is relevant to the topic of research, but could be much more so if the author would
discuss what level of minimum wage increase is needed in order for workers to achieve social
equality. Overall, the article is credible because the author is a professor at Temple University
and it is also contains little bias throughout the article.
In 2009, Joseph Sabia wrote the article, The Effects of Minimum Wage Increases on
Retail Employment and Hours: New Evidence from Monthly CPS Data (Sabia 2008) which
delves into how a minimum wage increase will effect the unskilled labor world of retail. Sabia
wrote the article using evidence from the monthly data from CPS reports during 1979-2004. In
the end, Sabia concludes that a 10 percent increase in the minimum wage is associated with a 1
percent reduction in overall retail trade employment. (Page 92) This finding helps to prove that
minimum wage increases have a negative effect on lower class employment, albeit a minuscule
one. This article contains pertinent information that is credible as it is supported by evidence
from studies
executed by trustworthy sources and is written for an intended audience of scholars with an
economic background who can understand the pieces language. In conclusion, this article is
relevant to the topic of research and provides another viewpoint which is valuable to the reader.
Effects of Increase on General Employment

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When viewing the questions regarding minimum wage increase, one must look at all
sides of the question. In this case, the researcher must make sure they view the increases effect
on employment in the American economy as a whole. Throughout the article, Effects of raising
the minimum wage: Research and key lessons (Wihbey 2015), the author views the increases
effects on employment in America. Referencing a 2014 nonpartisan congressional report,
Wihbey finds results to a couple of different scenarios. First, he finds that a wage raise to $10.10
would cause the loss 500,000 workers across the labor market as a whole, but he also finds that
there would be substantial gains in earnings for 16.5 million low-wage workers. Second, Wihbey
finds that when the minimum wage is increased to nine dollars per hour, the American labor
force would lose about 100,000 jobs and 7.6 million workers earning low wages would see a
substantial increase in their earnings. The article referenced above was written in the fall of 2015
making the article as well as relevant because of its content revolving around the effects of
different levels of minimum wage increases. The author is also credible because he is an
economic professor at an American university.
Another article which discusses multiple effects of proposed minimum wage increseae in
addition to the effects on employment is The Effects of Minimum Wages on Employment
(Neumark 2015). This article written by David Neumark finds when applied to only teenagers,
higher minimum wages have reduced jobs by nearly 19,000 jobs. In addition, the author finds
that when using the same theories on the age group of sixteen to twenty-four year olds, the
number of jobs lost increases to almost 75,000. This article has credibility because its author is
the Chancellors Professor of Economics at the University of California Irvine. The

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intended audience for this piece is any educated adults whom are searching for information
regarding minimum wage increases and the scope of this article is narrow because it focuses
much of its attention on the employment effects only. Also, the article is nearly complete up to
date because it was published in late December of 2015.
The article, The elasticity of labor demand and the minimum wage (Danziger 2008) is
an article written for the Journal of Population Economics. Danzigers article views all pieces of
employment regarding minimum wage increase while using estimates, theories, and past effects
as supporting evidence. On the topic of short term employment, Danziger finds that increases
will make workers better off when there are high elasticities of labor demand and much worse
off the elasticities are lower. Regarding long term employment, Danziger finds that the benefits
for the long term unemployed are so bad causing workers to want the minimum wage decreased,
citing other countries around the world. The language of Danzigers article is economic driven
and tough for the general reader to understand making the article intended for scholars only.
Also, the article has relevance to the topic of research because the entirety of the article discusses
how minimum wage increases effect the demand for labor in other countries and estimates of
how it would be effected in America.
Published in 2000 is the article, On the substitution effect of the minimum wage
increase: new evidence (Hsing 2000) which dissects how the substitution effect relates to the
effects of minimum wage increases. As Hsing looks into the substitution effect, he finds that if
the relative wage (relative wage is the ratio of minimum wage to the average hourly wage in
private sector) rises, then the part-time/full-time employment ratio increases. In essence, the two
have an inverse relationship in economic terms. In the end, Hsing concludes that while the

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increase in minimum wage is being executed, the substitution effect will cause there to be large
amounts of structural unemployment for those who are less qualified. Some of these unemployed
will regain their jobs after the period of economic reaction to the increase completes, but not all.
The source discussed is outdated in some ways as it was written in 2000, but it still provides
credible and relevant information to the topic of research. This article provides a different point
of view regarding the subject of research unlike many other sources which look at the topic in
similar ways.
Conclusion
To conclude, the effects of minimum wage increases on the American economy are
discussed often and widely disagreed upon. As the United States continues to fall behind the rest
of the world on the world economic scale, it is apparent that some change must be instituted for
the nation to continue to see success. When looking at the evidence presented above, it is easily
seen that there is no clear answer to this question and more real life trials must be completed
across the nation before a definitive conclusion can be made. For now, those who live in the
United States must hope that a beneficial solution to the nations economic problems is found
soon whether that be increases in minimum wage or not.

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Works Cited

Danziger, Leif. "The Elasticity of Labor Demand and Minimum Wage." Journal of Population
Economics 22.3 (2009): 757-72. Ebsco Host. Web. 22 Mar. 2016.

Hoffman, Saul D. "Are the Effects of Minimum Wage Increases Always Small? A Reanalysis of
Sabia, Burkhauser, and Hansen." Industrial and Labor Relations Review 69.2
(2016):

295-311. Ebsco Host. Web. 23 Mar. 2016.

Hsing, Yu. "On the Substitution Effect of the Minimum Wage Increase: New Evidence." Applied
Economics Letter 7.4 (2000): 225-28. Ebsco Host. Web. 22 Mar. 2016.

Neumark, David, and William Wascher. "Do Minimum Wages Fight Poverty?" Economic
Inquiry

40.3 (2002): 315-3. Ebsco Host. Web. 23 Mar. 2016.

Neumark, David. "The Effects of Minimum Wages on Employment." FRBSF Economic Letter
2015.37 (2015): 1-5. Ebsco Host. Web. 20 Mar. 2016.

Rogers, Brishen. "Justice at Work: Minimum Wage Laws and Social Equality." Texas Law
Review 92.6 (2014): 1543-598. Ebsco Host. Web. 23 Mar. 2016.

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Sabia, Joseph. "The Effects of Minimum Wage Increases on Retail Employment and Hours: New
Evidence from Monthly CPS Data." Journal of Labor Research 1st ser. 30.1 (2009):
75-97. Ebsco Host. Web. 24 Mar. 2016.

Sabia, Joseph, Richard Burkhauser, and Benjamin Hansen. "Are the Effects of Minimum Wage
Increases Always Small? New Evidence From a Case Study of New York State."
Industrial and Labor Relations Review 65.2 (2012): 350-76. Ebsco Host.
Web. 22 Mar.

2016.

Stewart, Jeanine. "Apocalypse Not: $15 and the Cuts That Never Came." Paget Sound Business
Journal (2015). Web. 24 Mar. 2016.

Wicks-Lim, Jeannette. "Is a $15 Minimum Wage Economically Feasible?" Dollars and Sense
(2016). Ebsco Host. Web. 22 Mar. 2016.

Wihbey, John. "Effects of Raising the Minimum Wage: Research and Key Lessons - Journalist's
Resource." Journalist's Resource (2015). Ebsco Host. Web. 22 Mar. 2016.