There is no shortage of reasons to be skeptical of the intensifying push, now formally endorsed by the Democratic Party, to raise the national minimum wage to $15 per hour. This magnitude of such a hike is unprecedented; city-level $15 minimums have not exactly been roaring successes; restaurants could respond to a wage hike by automating more jobs; and the minimum wage movement, as currently constituted, is facilitating outrageous union malfeasance. And, of course, trying to set one national minimum wage is foolish policy when cost of living varies from place to place.
But if one more were needed, Adam Ozimek offers yet another compelling reason for concern in a piece at Moody’s: a $15 dollar minimum wage would be especially damaging to U.S. manufacturing, an industry that has recently started to make a small and fragile comeback.
Minimum wage debates typically focus on the service, hospitality, or retail industries, and it’s easy to see why: The majority of workers making under $8 per hour work in one of these sectors. An increase to, say, $9 dollars per hour probably would have the biggest impact on service and retail. But Ozimek argues that an increase of the magnitude currently being considered would also have a strong impact on the manufacturing sector. He crunches the numbers and finds that 35 percent of manufacturing workers—5.3 million people—are currently earning less than $15 per hour. “Lifting the minimum wage to $15 an hour”, he notes, “would not just be quantitatively larger than previous U.S. experience, but qualitatively different in that it would affect a different set of workers and industries.”
Moreover, mandated wage increases in the manufacturing industry could imperil more American jobs than wage increases in the fast food industry because manufacturing is more mobile, and more subject to the forces of global economic competition. Ozimek writes:
The potential for lost jobs is particularly acute given that many manufacturers face global competition. If wages become too high in one place, it’s easier for a manufacturer than for, say, a restaurant, to relocate operations. After all, the huge decline in manufacturing employment in previous decades is in part a warning about the unsustainability of above-market wages in a globally competitive environment.
Minimum wage increase or no, mass manufacturing can never reclaim the place in America’s economic life that it held 50 years ago—the economy has changed too much since the heyday of the blue model. Nonetheless, we’ve been thrilled to see the manufacturing industry pick up some steam over the last few years, providing a crucial source of jobs and income during a period of economic transition, especially in rural and suburban areas. The $15 dollar minimum movement is a good way to send even what’s left of manufacturers packing, and stop the recent uptick in American manufacturing. It’s ironic that it has the blessing of a party that has made restoring manufacturing a key part of its platform for decades.