Minimum Wage Mythbusters
Myth 1: Raising the minimum wage will only benefit teens.
Not true: The typical minimum wage worker is not a high-school student earning weekend pocket money. In fact, 88 percent of those who would benefit from a federal minimum wage increase are age 20 or older, and 55 percent are women.
Myth 2: Increasing the minimum wage will cause people to lose their jobs.
Not true: A review of 64 studies on minimum wage increases found no discernable effect on employment. Additionally, more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in support of raising the minimum wage to $10.10 by 2016.
Myth 3: Small business owners can’t afford to pay their workers more, and therefore don’t support an increase in the minimum wage.
Not true: A June 2014 survey found that more than 3 out of 5 small business owners support increasing the minimum wage to $10.10. Small business owners believe that a higher minimum wage would benefit business in important ways: 58% say raising the minimum wage would increase consumer purchasing power. 56% say raising the minimum wage would help the economy. In addition, 53% agree that with a higher minimum wage, businesses would benefit from lower employee turnover, increased productivity and customer satisfaction.
Myth 4: Raising the federal tipped minimum wage ($2.13 per hour since 1991) would hurt restaurants.
Not true: In California, employers are required to pay servers the full minimum wage of $9 per hour - before tips. Even with a recent increase in the minimum wage, the National Restaurant Association projects California restaurant sales will outpace the U.S. average in 2014.
Myth 5: Raising the federal tipped minimum wage ($2.13 per hour since 1991) would lead to restaurant job losses.
Not true: Employers in San Francisco must pay tipped workers the full minimum wage of $10.74 per hour – before tips. Yet, the San Francisco restaurant industry has experienced positive job growth over the past few years according to the Bureau of Labor Statistics.
Myth 6: Raising the federal minimum wage won’t benefit workers in states where the hourly minimum rate is already higher than the federal minimum.
Not true: Only 23 states and the District of Columbia currently have a minimum wage higher than the federal minimum, meaning a majority of states have an hourly minimum rate at or below the federal minimum. Increasing the federal minimum wage will boost the earnings for some 28 million low-wage workers nationwide. That includes workers in those states already earning above the current federal minimum. Raising the federal minimum wage is an important part of strengthening the economy. A raise for minimum wage earners will put more money in more families’ pockets, which will be spent on goods and services, stimulating economic growth locally and nationally.
Myth 7: Younger workers don’t have to be paid the minimum wage.
Not true: While there are some exceptions, employers are generally required to pay at least the federal minimum wage. Exceptions allowed include a minimum wage of $4.25 per hour for young workers under the age of 20, but only during their first 90 consecutive calendar days of employment with an employer, and as long as their work does not displace other workers. After 90 consecutive days of employment or the employee reaches 20 years of age, whichever comes first, the employee must receive the current federal minimum wage or the state minimum wage, whichever is higher. There are programs requiring federal certification that allow for payment of less than the full federal minimum wage, but those programs are not limited to the employment of young workers.
Myth 8: Restaurant servers don’t need to be paid the minimum wage since they receive tips.
Not true: An employer can pay a tipped employee as little as $2.13 per hour in direct wages, but only if that amount plus tips equal at least the federal minimum wage and the worker retains all tips and customarily and regularly receives more than $30 a month in tips. Often, an employee’s tips combined with the employer’s direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage. When that occurs, the employer must make up the difference. Some states have minimum wage laws specific to tipped employees. When an employee is subject to both the federal and state wage laws, he or she is entitled to the provisions of each law which provides the greater benefits.
Myth 9: Only part-time workers are paid the minimum wage.
Not true: About 53 percent of all minimum wage earners are full-time workers, and minimum wage workers contributed almost half (46 percent) of their household’s wage and salary income in 2011. Moreover, more than 88 percent of those who would benefit from raising the federal minimum wage from $7.25 to $10.10 are working adults, and 55 percent are working women.
Myth 10: Increasing the minimum wage is bad for businesses.
Not true: Academic research has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs.
Myth 11: Increasing the minimum wage is bad for the economy.
Not true: Since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, real GDP per capita has steadily increased, even when the minimum wage has been raised.
Myth 12: The federal minimum wage goes up automatically as prices increase.
Not true: While some states have enacted rules in recent years triggering automatic increases in their minimum wages to help them keep up with inflation, the federal minimum wage does not operate in the same manner. An increase in the federal minimum wage requires approval by Congress and the president. However, in his call to gradually increase the current federal minimum wage to $10.10 per hour, President Obama has also called for it to adjust automatically with inflation. Eliminating the requirement of formal congressional action would likely reduce the amount of time between increases, and better help low-income families keep up with rising prices.
Myth 13: The federal minimum wage is higher today than it was when President Reagan took office.
Not true: While the federal minimum wage was only $3.35 per hour in 1981 and is currently $7.25 per hour in real dollars, when adjusted for inflation, the current federal minimum wage would need to be more than $8 per hour to equal its buying power of the early 1980s and more nearly $11 per hour to equal its buying power of the late 1960s. That’s why President Obama is urging Congress to increase the federal minimum wage and give low-wage workers a much-needed boost.
Myth 14: Increasing the minimum wage lacks public support.
Not true: Raising the federal minimum wage is an issue with broad popular support. Polls conducted since February 2013 when President Obama first called on Congress to increase the minimum wage have consistently shown that an overwhelming majority of Americans support an increase.
Myth 15: Increasing the minimum wage will result in job losses for newly hired and unskilled workers in what some call a “last-one-hired-equals-first-one-fired” scenario.
Not true: Minimum wage increases have little to no negative effect on employment as shown in independent studies from economists across the country. Academic research also has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs.
Myth 16: The minimum wage stays the same if Congress doesn’t change it.
Not true: Congress sets the minimum wage, but it doesn’t keep pace with inflation. Because the cost of living is always rising, the value of a new minimum wage begins to fall from the moment it is set.