Stories

Why $15 an hour has drawbacks of its own

Reproduced from Pew Research Center; Map: Axios Visuals

A $15 per hour minimum wage has become a national U.S. rallying cry from workers seeking middle-class security. But while double the current minimum, $15 has its own limitations — and risks uncontemplated social consequences.

Why it matters: A $15 wage may be enough to buy a small home in some parts of the U.S., and will increase the living standards of millions of Americans. But what's apparent on the map above is that it is barely sufficient for a studio apartment in the big cities, and it could upset workers already earning $15 and more.

Driving the news: Over the last year, major cities like New York, Seattle and San Francisco have declared $15 an hour minimums, and major corporations like Amazon and Disney have followed suit. These moves have made $15 the target across the country. but they also create new expectations that employers must consider.

Take El Centro, a city close to the Mexican border in California, where the median wage is $14.76, per the Bureau of Labor Statistics. Because of El Centro's lower prices, the purchasing power of $15 there actually comes to about $16.80, according to a government formula that reconciles the geographic value of wages from city to city.

  • But nursing assistants in El Centro already are paid a median wage of $15.07 an hour.
  • Now, they will be earning the same as fast-food cooks.
  • So unless the wages of nurses and professionals like them go up as well, they could start their own outcry, says Michael Saltsman, managing director of the Employment Policies Institute, a fiscally conservative DC think tank.

This scenario is playing out right now at Amazon. On Oct. 2, the company put in place a $15 an hour base wage for all employees. Senior warehouse workers who were already making $15 an hour were given a $1 an hour raise. But many protested that they would actually see a drop in total compensation because Amazon stopped issuing bonuses and stock awards, the Seattle Times reports.

  • Now, Amazon says it may resurrect some of the bonuses and stock awards.

The other side: Silicon Valley, only about 550 miles north of El Centro, is the most expensive part of the country. That same $15 is worth only around $11.80 there — and since the median hourly wage is already $27.66, the subject of the pay raise for most is moot, Saltsman says.