Policymakers and economists continue to debate the merits and costs of minimum wage increases. The Raise the Wage Act of 2021, if enacted, would increse the federal minimum wage from its current $7.25 an hour to $15 an hour. What are the policy implications of the proposal: would it reduce poverty, increase prices, cost jobs, raise living standards, or perhaps a combination of impacts? What is the read of the academic literature on the subject?

Professor David Neumark was featured on the popular economics podcast Freakonomics to help answer this question. Dr. Neumark is an economics professor at the University of California – Irvine, and on the show describes how the academic consensus on the minimum wage has changed over the years. The benefits and costs however, are clear to Neumark:

“So my research on the minimum wage, one of the things it tends to say is there definitely is some job loss. And I’m quite convinced of that. So on net, there are winners and there are losers. I think then the question is, how do you add those up? So one reasonable metric is to say, “Well, okay, do we reduce poverty?” If we do, then maybe the costs are acceptable relative to the benefits. My reading of the evidence is that it’s pretty hard to find convincing evidence that poverty will fall.”

You hear more from Professor Neumark on the Freakonomics Episode here.

The following states raised their minimum wage in 2014:

Connecticut: Connecticut’s hourly minimum wage will increase incrementally to $10.10 over the next three years.

Delaware: Delaware’s minimum wage will increase to $8.25 an hour, effective June 1, 2015.

Hawaii: Hawaii’s minimum wage will increase to $10.10 per hour over the next four years.

Maryland: Maryland raised its minimum wage to $10.10 an hour by July 2018

Massachusetts: A new law will gradually raise the minimum wage in the state to $11 per hour by 2017,

Michigan: A new law will increase the state’s minimum hourly wage to $9.25 per hour by Jan. 1, 2018

Minnesota: The state’s minimum wage increased on Aug. 1, 2014, to $8 per hour for large employers (>$500k in gross sales).  to $9.50 on Aug. 1, 2016. Beginning in 2018, the wage will be indexed to inflation to a maximum increase of 2.5 percent per year.

Rhode Island: The state’s minimum wage will increase to $9 per hour, effective Jan. 1, 2015.

Vermont: The state’s minimum wage will rise to $10.50 an hour by 2018.  After 2018, annual cost-of-living increases of either 5 percent or if it is lower, a rate calculated by the federal Department of Labor annually that is tied to the consumer price index.

West Virginia: The state’s hourly minimum wage will increase to $8 on Jan. 1, 2015, and increase to $8.75 the following Jan. 1, 2016.

Washington, D.C.: The Minimum Wage Amendment Act of 2013 will increase the district’s minimum hourly wage in three steps to $11.50 by July 1, 2016

-See more at: http://www.shrm.org/legalissues/stateandlocalresources/pages/states-minimum-wage-2014.aspx#sthash.YFK7jjgC.dpuf