By Aron Solomon
The idea that there is a clear link between increasing the minimum wage and decreasing crime isn’t new. Under a new mandate coming into effect later this week, Florida is about to put that theory into practice.
Florida’s minimum hourly wage will inch up to $8.65 on January 1st, an increase of nine cents per hour. But on September 30th, 2021, it will jump substantially to $10. The minimum wage then will increase by $1 each year until it reaches $15 an hour on the last day of September, 2026.
A 2016 article in The Atlantic showed that Florida’s current path of an increased minimum wage is inextricably linked to a reduction in crime rates:
Higher wages for low-skilled workers reduce both property and violent crime, as well as crime among adolescents… The impact of wages on crime is substantial … a 10 percent increase in wages for non-college educated men results in approximately a 10 to 20 percent reduction in crime rates.
Drawing a Florida analog to the piece in The Atlantic, that 2016 White House study looked at raising hourly minimum wage to $12 by 2020, The authors felt that it would result in a 3 to 5 percent crime decrease (250,000 to 510,000 crimes) and a societal benefit of $8 to $17 billion dollars.
Overall, 2020 has been a good year for proponents and beneficiaries of a rising minimum wage.
Twenty-one states began 2020 with higher minimum wages. Alaska, Florida, Minnesota, Montana, Ohio, South Dakota, and Vermont did a simple cost of living increase, while Arizona, Arkansas, California, Colorado, Illinois, Maine, Maryland, Massachusetts, Michigan, Missouri, New Jersey, New Mexico, New York, and Washington increased their rates pursuant to legislation.
2021 brings more of the same. With Florida taking a leading role nationwide.
John P. Lawlor, a Partner in the Florida law firm Lawlor, White & Murphey, LLP, also sees a significant practical benefit of the $15 minimum wage for Florida:
"At LWM we’ve felt a $15.00 minimum wage has many benefits for our employees and the community. Several years ago we instituted a $15.00 dollar an hour minimum for all employees. It’s really helped employee morale and retention."
Yet Florida is not the only state phasing in a $15 per hour minimum wage, as the following states have also approved $15 an hour minimum wage increases: California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Virginia and Washington, D.C.
One thing worth pointing out is that in only a very small number of jurisdictions is the minimum wage currently $15 an hour. The National Conference of State Legislatures has an excellent database that lists each state’s minimum wage and much more.
Washington, D.C.'s and New York City’s $15 (New York State is $11.80) per hour minimum wage is the highest in the country, followed by Washington State and California at $13.69 per hour and $14 per hour (for businesses with more than 26 employees), respectively. In fact, as of this Friday, Emeryville, California, will have the highest minimum wage in the nation, at $16.84 per hour. As an interesting aside, the cost of living in Emeryville is 43% less than in San Francisco, where the minimum wage is, as of July 1, 2020, $16.07 per hour.
While there are many proponents of increasing the minimum wage across the country, there are others who believe that the net effect is negative. They argue that especially after having been hit so hard by COVID-19, businesses can’t afford to pay their workers more. They fear that many businesses, especially small local ones, will have to fire workers or permanently close, with the increased minimum wage the last straw after the virus.
Few of the legal and political positions against increasing the minimum wage come with a cogent argument that there is no correlation between increasing the minimum wage and the reduction of crime. As many states have already passed legislation ensuring greater earning power for the most vulnerable of workers, more studies are surely ahead that will either solidify or begin to break down this link.
About Aron Solomon
Aron Solomon is the senior digital strategist for NextLevel.com and an adjunct professor of business management at the Desautels Faculty of Management at McGill University.