After President Obama proposed to raise the federal minimum wage from $7.25 per hour to $9.00 per hour in his State of the Union Address, D.C. officials have begun to consider the effects of this wage increase on the local economy, including the possibility of raising the minimum wage in D.C. beyond the federal government’s new benchmark.
Under the D.C. Minimum Wage Act Revision Act of 1992, the city’s minimum wage is set permanently at one dollar above federal minimum wage. The District’s minimum wage currently stands at $8.25 per hour and would increase to $10 per hour if the federal proposal is passed by Congress.
Mayor Vincent Gray has said that he supports an increase of the minimum wage and would even consider measures to independently raise it in D.C. if Congress does not do so.
“From a workers’ perspective, it’s a good thing,” Gray told The Washington Post. “If you work 2,000 hours each year, that still only puts you at $20,000 a year, which is very challenging economically.”
Some worry that changing the district’s minimum wage policy could hurt local businesses and cause unemployment to rise.
“Our minimum wage is set at one dollar more than the federal rate, and this rule was adopted with good reason. I support the continuation of that policy,” D.C. Councilmember Jack Evans, the Chairman of the Finance and Revenue Committee, wrote in an email. “It is a tough but important balance to make sure that we don’t inadvertently reduce the number of jobs available by increasing the costs on our small businesses or impairing our competitive position.”
Many entry-level student jobs on campus, such as student guards, some clerical assistants and student assistants at Lauinger Library, are paid minimum wage. Dean of Student Financial Services Patricia McWade expressed doubt that a higher minimum wage would result in fewer employment opportunities for students on campus.
“Georgetown depends a great deal on student employment,” McWade said. “I would imagine that most departments would make the case to keep hiring as many students as they have been, assuming they need them all. I don’t think that this is going to have much of a negative effect on our students or their ability to get jobs on campus.”
Economists are divided on the validity of concerns about unemployment effects resulting from wage increases.
In a January report, William Wascher of the Federal Reserve Board and University of California, Irvine economists David Neumark and J.M. Ian Salas concluded that the overall evidence warns of a tradeoff between higher wages and unemployment, but others have said that the proposed wage increase is small enough to result in minimal job loss.
Economics professor James Albrecht said that typical supply-demand model would not be able to accurately depict what would happen if minimum wage increased.
“Workers aren’t like bananas — workers are very heterogeneous and jobs are very heterogeneous,” Albrecht said. “This sort of market clearing supply-demand model isn’t a very good picture of that market.”
He also cited empirical studies comparing markets where the minimum wage was increased and markets where it remained the same. In these cases, he said, there were few negative effects associated with an increase in the minimum wage.
“My reading of the evidence is that at least for minimum wages at the level we’re talking about in the [United States], it is hard to believe that the unemployment effects are going to be very large at all,” he said.
Some Georgetown students paid minimum wage say that the current pay is fair for them but that the proposal would be significant for full-time workers supporting a family.
“That would be good for the community, just because the living expenses of D.C. are very high as compared to other cities,” Johanny Lopez (SFS ’15), a student guard at Village C West, said. “For the job I’m doing it’s fair; for other people in the city, maybe it’s not.”
“The pay is pretty fair for what I’m doing,” Erik Sutton (SFS ’16), a student guard at Lauinger Library, said. “But I’m happy because it’s more money in my pocket.”
