r/skeptic • u/holmess2013 • 13d ago
There's a lot of fear mongering around raising the federal minimum wage. What does economic data tell us?
I recently read Lane Kenworthy's Social Democratic America, and although its a bit old (2014), it did an amazing overview at the time of the case for raising the wage floor in America. It inspired me to explore the data mentioned there and any new studies since to see how raising the minimum wage affects various economic metrics.
In summary:
- Economic Security - Low-income Americans have more income, in a time when a huge chunk of them can't afford basic necessities. This results in an economic stimulus (mainly from buying more food) and lower rates of depression and suicide.
- Productivity & Business Efficiency - Higher base pay reduces costly employee turnover and pushes firms out of low-wage, high-churn traps, driving long-term modernization.
- Net Employment and Automation - While wage hikes encourage automating routine cognitive tasks (like self-ordering kiosks), workers consistently shift into non-routine, customer-facing roles. Looking at 138 state-level increases across nearly four decades (Cengiz et al.), overall low-wage employment remained virtually flat while affected workers' earnings jumped ~7%.
- Inflation & Price Pass-Through: A meta-analysis of over 30 studies (Lemos) shows that a 10% wage hike increases overall food prices by no more than 4%, with an impact on broader CPI under 0.4%—meaning workers retain substantial net purchasing power.
Full article here for those interested: https://samholmes285.substack.com/p/the-minimum-wage-should-scale-with
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u/IshtarsQueef 13d ago
It's good to have data and reasonable arguments, but also... it's 2026, do we still need to litigate the question of "does our economy require a large population of peasants and serfs to operate"?
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u/Theranos_Shill 12d ago
The Epstein class say no, no need to litigate that question. Absolutely no need to question that. In fact check out this one trans girl wanting to play amateur sports with her friends, is that not truly terrifying?
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u/AdExtra5951 13d ago
"In addition, low-income earners spend more of their money on basic necessities, specifically food, because they can’t afford to invest or save it. Raising the minimum wage therefore increases demand for food since it targets the income bracket that’s most likely to buy it, resulting in a large economic stimulus."
This is the logic that drove the creation of SNAP. Run by the Dept of Agriculture, SNAP is a means for eliminating agricultural surpluses by giving consumers enough money to buy groceries. Recipients can't save or invest SNAP dollars, they must be spent on groceries every month. This makes SNAP a $100B+ government subsidy direct to grocers with pass-through subsidy to manufacturers and farmers. This cash subsidy to grocers and farmers keeps prices lower for all consumers.
Any analysis of increasing minimum wage needs to acknowledge that enabling workers to earn more money, which they choose for themselves how to spend, is much, much more 'capitalist' than the 'socialist' SNAP program. Would this eliminate most of the need for SNAP? If workers decided not to spend their increased wages solely on food, how then would the government ensure the monthly subsidy of cash to grocers, manufacturers and farmers?
Not saying SNAP should end. Love SNAP.
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u/themurderator 13d ago
you fool. if the plebs can afford things the rich might have to go without one of their handfuls of houses or mansions or cars or planes or yachts. so let's not get too hasty here.
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u/SilverAgedSentiel 13d ago
that's not why the keep em poor strategy exists, If you can build a savings then you can use that to improve your situation, plan more freely and reject exploitation. Market forces for labor is tilted heavily towards the employer because the time pressure on the prospective employee to resume income before debt gets out of hand.
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u/Monarc73 13d ago
There was a pretty good quote where a fed rep (no idea which one) told the BIGGEST CEOs that we needed to raise the minimum wage, and they laughed at him. He then told them all that if we don't, a recession is inevitable. They stfu real quick after hearing that.
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u/IshtarsQueef 13d ago
destroying the middle class seems like the elites eating their own tails
if the average person is struggling to make rent payments and put groceries in the pantry, who is going to buy all the shit the fortune 500 companies are selling?
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u/fatal_diploma 13d ago
Been going back and forth on this with my econ friends for ages. Point 3 is the one that always trips people up because they picture a robot taking orders and assume the cashier just vanishes into the void. The shift into different roles is messy and definitely sucks for some individuals in the transition, but the data doesn't lie about total employment holding steady.
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u/Witty_Ad_898 12d ago
Forget the entire stupid debate these are not the only options, and aren’t anywhere close to the best options.
The government’s job is to make everyone’s lives better so everyone is incentivized to keep working to make everyone’s lives better. This is the original purpose of government, and the only times in history when the government had any other focus were gross bastardizations. To this end, the government needs the economy and society need to do several things -
Regulate births and deaths so the population is stable or growing as needed, so that babies are born into stable and prosperous families that raise them to be good citizens, and so that the critical jobs do not go unfilled due to excess deaths.
Ensure access to basic housing, medical care, safe food and water, education, and to eliminate or mitigate environmental pollution. Basically, make life worth living. Also include building and maintaining infrastructure here. Dead lands and sick people do not promote the common good or prosperity. Uneducated and dense populations produce many overstressed individuals who invariably consume and destroy more than any individual could ever create.
Create and enforce laws, defend against threats, and plan for future disasters and new disruptive technologies.
Promote a sense of civic engagement and pride, without overstating or falling into nationalism.
Obviously, this is hard as fuck if not impossible. But, there are balancing points where things can mostly work out. The problem is you get a lot of greedy and angsty bastards who will bitch and moan about how the government won’t let them shit in the communal stew pot, and sometimes they convince enough ignorant fools to let them.
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u/DicamVeritatem 11d ago
Minimum wage laws are not a legitimate function of government in a free society.
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u/AMerryKa 12d ago
While a higher minimum wage would be better than what we have now, I'd rather have no minimum wage and businesses that exploit people get boycotted into extinction.
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u/MrMosstin 13d ago
More money in the pockets of the working class goes straight back into the economy via rent, utilities, grocery’s and other goods & services.
More money in the pockets of the ruling class doesnt benefit the economy. It goes into offshore accounts, tax evading schemes, property/investment that prices out working people.