by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
How many workers in North Carolina are paid at or below (such as tipped workers) the minimum wage? Very few. According to the U.S. Bureau of Labor Statistics, only 3.1 percent are paid at or below the current federal minimum wage of $7.25 per hour.
How many workers in North Carolina would be affected by a $15/hr. minimum wage? Nearly half. The National Employment Law Project estimates it at 47.5 percent, and the Economic Policy Institute estimates it at 49.7 percent.
Nationally, the percentage of workers paid at or below the minimum wage has been falling since 2010, from 6.0 percent to 2.1 percent. The simple reason is that prevailing wages are increasingly higher and higher than the arbitrary wage floor imposed by the federal government. Economic growth and competitive market forces are making it easier for workers and employers to agree to wage rates higher than the minimum wage.
Raising that floor — especially to such a high level as $15/hr. — would put the minimum wage above many prevailing wages. What that means is that it will price some workers out of the legal labor market. The higher the minimum wage, the more workers and prospective workers will be disemployed.
Going to $15/hr. would impact every worker earning less than $15/hr. It would impact every potential worker who could command only a wage less than $15/hr. (It could also conceivably impact many workers earning above $15/hr. who would be unhappy if others received massive raises while their pay was unaffected.)
Economist James Sherk for the Heritage Foundation estimated that a hike to a $15/hr. minimum wage would disemploy 367,000 North Carolinians.
Large supermajorities of economists predict that such a huge minimum wage increase would have net negative effects on jobs, youth employment, adult employment, job prospects of low-skilled individuals, and the likelihood of small businesses staying in business. Few if any expect net positive effects on those things.