How raising the minimum wage to $15/hour would impact Texas

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AUSTIN (KXAN) — Texas would lose 100-150,000 jobs if a mandated $15/hour minimum wage became law, according to a UT Professor who contributed to the Congressional Budget Report released earlier this week.

The state, however, would see an outsized increase in higher wages because the state minimum wage is the lowest it can be: $7.25/hour.

“Like everything in life, you have a trade-off. Some jobs will be lost. Some people will get wage increases. You got to decide which you want,” said Professor Emeritus Daniel Hamermesh from the University of Texas at Austin.

Texas has six percent of the national employment.

The Congressional Budget Office looked at the American economy if the minimum wage was $10, $12, or $15/hour by 2025. The report predicts 17 million workers would see their wages lifted while 1.3 million people would lose jobs. Around that same number of people would rise out of poverty because of the measure.

“We know what happens when wages and costs go up; how many employers cut back. We can use those estimates, along with estimates of people who might be affected by this, to gauge the size of this effect,” said Hamermesh.

One and a half million tipped workers would be directly affected by the $15 option but Hamermesh says statistically that is a pretty small part of the workforce.

“Remember, lots of folks in low-wage jobs are not heads of households, they’re secondary or tertiary workers in the households, they can be teenagers. I think there could be some effect. But as an anti-poverty device, this is not the best one to use at all,” said Hamermesh. “The best argument for it is that some people’s wages would be raised. Those who don’t lose their jobs would be getting higher wages. That’s the argument I can see for it. That’s substantial. The evidence they provide suggests there will be some effects of that. Again, not huge. But something.”

If the state went to $12/hour, he predicts the state would lose 30-50,000 jobs.

The current minimum wage is $7.25/hour but many states have already gone above that amount. The last time the minimum wage was changed in 2009.

However, according to the CBO, the exact numbers may vary greatly, with the office saying there is about a two-thirds chance that the change in employment would lie between about zero and a reduction of 3.7 million workers.

The uncertainty comes from unknown wage growth in the years ahead.

If wages go up with current law, the impacts will be smaller. If wages grow smaller than CBO predicts, the impact will be larger.

The CBO specifically looked at slowly raising the required wage through five annual increases. First, they used data from the Current Population Survey and the Bureau of Labor Statistics and the Census Bureau as a sample weight. They used 160,000 workers to gauge national wages. They used 20 years of historical data to forecast hourly wages and accounted for effects on workers of future increase in some states minimum wages.

Texas Association Business says it could impact young people.

James Hines, Senior Vice President of Government Affairs from the Texas Association of Business, tells KXAN mandating higher wages will force employers to fire their less-experienced people, many teenagers or young Americans who are looking for their first job experience.

Hines believes wage increase should be encouraged through ways more in line with the free-market, with higher demand for good people forcing wages to rise. Hines cites Central Texas restaurants that are paying $10 and $12 an hour.

Ed Sills from the AFL-CIO disagrees with the job loss numbers and believes raising the minimum would make its largest impact by reducing economic inequality.

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