Raising Minimum Wage boosts economy

by Doug Hall

Increasing the minimum wage to $15 an hour is one of the best things we can do to simultaneously help low-wage, working families and boost the Rhode Island economy.

Today, a full-time, year-round worker earning a minimum wage in Rhode Island would fall nearly $5,000 a year short of the amount needed for a single adult to make ends meet, according to the Economic Progress Institute’s most recent Rhode Island Standard of Need.

Anyone working that hard deserves to be paid enough to eat and keep a roof over their head.

Putting more money in the pockets of Rhode Island workers not only helps those families, it also puts more money in the cash registers of local businesses and creates jobs in our state. Increasing the minimum wage to $15 an hour would put more than $100 million in the pockets of 118,000 working Rhode Islanders, money they could, in turn, spend locally, supporting Rhode Island businesses, and contributing to thriving communities and a more-prosperous state. We know that the real “job creators” in our economy are working women and men with sufficient disposable income to pay for the goods and services offered by Rhode Island businesses.

We also need to continue to increase the minimum wage if we don’t want the spending power of low-wage workers to be reduced. Any year in which we fail to increase the minimum wage we are effectively giving Rhode Island’s lowest income-earners a wage cut, as inflation eats away at any recent increases.

Because of years of neglect, Rhode Island’s minimum wage had lost much of its value. Rhode Island’s minimum wage was worth less in inflation-adjusted dollars than its 2000 value in 13 out of 14 years between 2000 and 2014. It’s only because Gov. Gina M. Raimondo and the General Assembly have partnered to increase the minimum wage in recent years that Rhode Island workers have finally gained ground, earning $1.14 more in inflation-adjusted dollars in 2018 than they had been in 2000.

Critics of minimum wage increases mistakenly claim that raising the minimum wage will result in job loss, but the evidence is to the contrary. One recent study that looked at more than 35 years of U.S. minimum wage increases between 1979 and 2016 – 137 increases in all, found little to no change in employment following minimum wage increases.

We do know that minimum wage increases accomplish their intended purpose – increasing the well-being of low-wage workers, who are disproportionately women and people of color. Nearly half have at least some college education and 25 percent are parents.

Increasing the minimum wage is a win-win for Rhode Island, moving thousands of Rhode Island families toward economic stability while boosting the Rhode Island economy. Raising the minimum wage levels the playing field among businesses, strengthens the economy and helps families, businesses, and communities thrive.

Douglas Hall is director of economic and fiscal policy at the Economic Progress Institute.