San Antonio professors research shows raising federal minimum wage to $17 is a bad idea

By Matt Roy of NEWS4SA.

"Senator Bernie Sanders, I-VT, and nearly 200 of his colleagues in Congress have introduced legislation that would raise the federal minimum wage to $17 by the year 2028.

The Raise the Wage Act of 2023 also has support from nearly 50 labor organizations across the country including the AFL-CIO and the American Federation of Teachers (AFT).

“The $7.25 an hour federal minimum wage is a starvation wage. It must be raised to a living wage – at least $17 an hour,” Sanders said in a statement.

Sanders and his supporters estimate this move could help 28 million Americans.

However, Trinity economics professor Dr. David Macpherson believes it would hurt, not help.

"It's not an efficient way to help low-income workers,” The professor said.

Dr. Macpherson and his colleague Dr. William Even of Miami University conducted an analysis for the Employment Policies Institute (EPI) that shows more than a million Americans would lose their jobs if this Act was passed and voted into law.

According to the new EPI report, the nation could expect to lose more than 1.2 million jobs just by raising the federal minimum wage to $17 an hour.

The analysis shows that tipped employees, such as restaurant workers, would be affected even more.

Sanders wants to see tipped employees like restaurant workers be paid $17 an hour too.

Currently, they make $2.13 an hour under the tip credit model, with the vast majority of their wages coming from gratuities.

The tip model allows tipped employees to make as much money as they can but allows employers the flexibility of putting that onus on the consumer, instead of the employer.

“Under the tip credit model, the median hourly take-home pay for servers is $27 An hour right now in our industry, and that goes all the way up to $41.50 for the higher income earners,” Kelsey Erickson Streufert from the Texas Restaurant Association said.

“The higher wage costs are going to raise the cost to employers to hire workers,” Macpherson added. “And so, they want to cut back on their labor costs, and so reduce employment, "

The study estimates that even if the tip credit was left alone and tipped employees were left at $2.13, approximately 1,208,262 million jobs would be lost nationwide, with nearly a quarter of a million (245,741) coming from Texas alone.

If tipped employees are also raised, the EPI estimates that those numbers would jump to nearly 1.7 million (1,655,300) nationwide and 337,088 in Texas.

"One, they would have to eliminate positions completely,” Erickson Streufert said. “And two, they would have to raise prices. That will actually result in less take-home pay for the employees that were supposedly trying to help with this proposal."

Sanders added that his proposal would help get people out of poverty – something the US desperately needs.

“In the year 2023 a job should lift you out of poverty, not keep you in it,” Sanders said. “At a time of massive income and wealth inequality and record-breaking corporate profits, we can no longer tolerate millions of workers being unable to feed their families because they are working for totally inadequate wages. Congress can no longer ignore the needs of the working class of this country. The time to act is now.”"